4 November 2011, UN Headquarters, New York.
The panel discussion was jointly organized by the Permanent Mission of Paraguay to the United Nations and the Office of the High Representative for the LDCs, LLDCs and SIDS with the objective to draw upon the wealth of knowledge of development practitioners, experts and policy makers to examine the latest developments in the Aid for Trade initiative and the multilateral trade negotiations, with specific focus on trade facilitation, and how these could positively impact on the LLDCs’ efforts to make their trade flows smoother, cheaper and faster. The event was attended by more than 70 participants who included Ambassadors and Representatives from Permanent Missions of LLDCs, Transit developing countries, other developing countries and donor countries; experts and representatives of other international organisations.
H.E. Mr. Antonio Dos Santos, Permanent Representative of Paraguay to the United Nations, chaired the meeting in his capacity as Chairman of the Group of LLDCs. Mr. Cheick Sidi Diarra, United Nations Under-Secretary-General and High Representative for the LDCs, LLDCs and SIDS, acted as moderator, In his welcoming remarks, H.E. Mr. Dos Santos stressed that the panel’s topic had been chosen with great care and attention, since increasing the participation of LLDCs in world trade was without any doubt among the highest priorities of their countries.
Mr. Diarra noted, in his remarks, that the LLDCs found themselves on an inherently disadvantaged development path due to their lack of access to the sea, coupled with remoteness from major markets and difficult topography. He recalled that in 18 LLDCs the per capita GDP was well below $1,000. The persistence of such low per capita incomes in these countries had resulted in a vicious circle where transport infrastructure investment was not viable owing to too little demand for transport services and simultaneously less economic activity took place because of inadequate infrastructure. This resulted in less domestic revenue available for investment into the social sectors required to attain the MDGs. High transaction costs and inefficiencies constituted important barriers to trade and foreign direct investment and thus to economic growth and poverty reduction, and they remained the main reasons behind the LLDCs’ continued marginalization within the global economy. He pointed to the fact that notwithstanding some improved export performances, the LLDCs’ share of world trade in goods hovered below 1 per cent. While widespread transit transport policy reforms had reduced border delays and inefficiencies, he called for strengthened efforts to be made by L:LDCs, in cooperation with the transit developing countries and with the support of their development partners, in order to increase their participation in world trade.
The panel discussion was led by the presentations of three leading experts on the topic:
- (1) His Excellency Mr. Mothae Anthony Maruping, Permanent Representative of the Kingdom of Lesotho to the UN Office and other international organizations in Geneva, Chairman of the Committee on Trade and Development of the World Trade Organization and also President of the 58th session of the UNCTAD Trade and Development Board.
- (2) Mr. Shishir Priyadarshi, Director of the Development Division of the World Trade Organization and a long-time friend of the landlocked developing countries
- (3) Mr. Dominique Njinkeu, Program Coordinator of the Trade Facilitation Facility, from the International Trade Department of the World Bank.
(1) H.E. Mr. Maruping identified the progress made and the challenges and opportunities ahead for LLDCs to increase their participation in international trade. He stated that trade was one of the major vehicles of strong, sustained and inclusive economic growth leading to sound and sustainable socio-economic development which should result in poverty reduction and human development. Given the small size of most LLDCs, he argued that export-led growth still represented the most credible economic growth strategy, since the domestic market was often too small to sustain meaningful growth.
He highlighted that the major challenges that limited the participation of LLDCs in international trade were noted to include: high transport costs in terms of both freight and time costs; poor soft and hard infrastructure; weak institutional and productive capacities; dependency on more exogenous factors such as conditions, policies and practices of transit countries; and the high vulnerability of LLDCs’ economies to external shocks. He also underlined the persisting bottlenecks related to trade facilitation that LLDCs experience that include: excessive number of documentation for import/export; multiplication of scheduled and unscheduled roadblocks; lack of effective and transport adjacent border controls; unnecessary customs convoy; insufficient application of ICT; lack of transparency of trade and customs laws; under-developed logistics sector; and absence of competition in transit transport services sector.
He stressed that the special needs and challenges of LLDCs should be addressed effectively and expeditiously by the international community. For the LLDCs, creating an enabling environment and effecting other requisite measures and conditions needed to enhance competitiveness on the global scale, attracting FDI, enhancing productivity, and connecting to the global markets, were the imperatives. Hence the key importance of Trade Facilitation and Aid for trade. He noted that there are already some efforts that have been made to address the special needs of LLDCs. For example, the Almaty Programme of Action has measures aimed at improving trade facilitation for LLDCs and its further implementation of can bring about desirable benefits for the LLDCs. Articles V, VIII and X of GATT provide for binding rules that ensure improved conditions for transit, harmonized and transparent standards as well as speedy movement of goods across the borders.
He added that as preparations for UNCTAD UNCTAD XIII in Doha, Qatar, in April 2012, were underway, attention ought to be devoted to the LLDCs’ special needs in its outcome document, including proposals on the way forward for LLDCs. Such a request had already been lodged by the LLDCs Group at UNCTAD in addition to the submission of G77 and China. As for the WTO Doha Development Agenda, he underscored that because of the single undertaking format, which dictated that nothing was agreed until all was agreed, some useful and agreeable elements such as Trade Facilitation, had also been held hostage. He noted that it would be in the LLDCs’ interests to make efforts to persuade the 8th WTO Ministerial Conference scheduled for December 2011, to delink Trade Facilitation from the single undertaking mould of the WTO Doha Development Rounf of trade negotiations, especially since TF had been the least contentious area of the DDA. Amb. Maruping’ also recommended strengthening regional integration efforts and tilting towards more trade in services that were less subject to obstacles by transit neighbours as advisable strategies for the LLDCs. [FULL STATEMENT link].
(2) Mr. Priyadarshi provided a detailed background to the Aid for Trade initiative as well as an update on its implementation. He stressed that AFT had held up well despite the global economic turmoil, with commitments reaching nearly $40 billion in 2009 – a 60 per cent increase over the average for the first half of the decade. The increased funding was not diverted from other forms of assistance. Mr. Priyadarshi noted that AFT commitments to LLDCs had boomed, from an average of $4.1 billion in 2002/05 to $7.8 billion by 2009, now accounting for just under a fifth of all AfT commitments. However, even though close to 20% of all AfT flows go to LLDCs, much more could be done. He indicated that Aid for Trade had made tangible results on the ground since 2005 when it was established. Some of the tangible results of AfT to LLDCs include: a regional project in East Africa improved transit times at the border from three days to three hours and an Asian Development Bank project helped cut travel time between Lao PDR and Vietnam from 10-12 hours to 2-3 hours; border crossing times went from 487 minutes to 151.
He also drew attention to the fact that LLDC-specific projects as well as broader trade facilitation efforts featured prominently in the case story exercise. He reported that at the Third Global Review of Aid for Trade, held in July 2011, no fewer than 96 of the 275 case stories submitted – over a third – were either specifically about LLDCs or submitted by LLDCs themselves, without mentioning the great number of stories concerning trade facilitation assistance that included LLDCs among the beneficiaries. He encouraged LLDCs to be even more proactive in submitting their case stories.
Some key lessons learned from the AFT initiative implementation so far pointed to country ownership at the highest political levels and effective intra-governmental co-ordination as critical factors for success. Active local stakeholder participation (including the private sector and civil society) in preparation and implementation of AFT projects was also crucial, as well as adopting integrated approaches combining public and private investment with technical assistance. Finally long-term donor commitment and adequate and reliable funding were considered essential. Mr. Priyadarshi concluded that the demand driven nature of the AFT initiative required LLDCs to push in all forums – regional and multilateral. [FULL PRESENTATION link].
(3) Mr. Dominique Njinkeu, Program Coordinator of the Trade Facilitation Facility of the World Bank, made a presentation on the topic of the WTO Negotiations and the World Bank. The presentation highlighted the trade facilitation activities being undertaken by the World Bank under its Trade Facilitation Facility. He indicated that the aim of the WTO trade facilitation negotiations is to raise the profile of trade facilitation in national and regional development strategies; build the capacity of stakeholders; connect Geneva and capitals; and focus on implementation. A core component to the WTO negotiations is trade facilitation needs assessments at national and regional levels.
In line with the WTO negotiations, he indicated that the Trade Facilitation Facility supports implementation of the gateway reforms aimed at harmonizing customs and border procedures. He stressed the need to work towards the objectives of gateway reforms, to harmonize customs and border procedures, in order to facilitate, simplify and secure External Trade Transactions for LLDCs. The activities of the project include: developing a trade information portal, streamlining declarations to reduce processing time and administrative errors and improve operational efficiency and the quality of trade statistics, and designing and implementing a Business Change Management program with joint controls and a common IT platform. The Facility has supported selected gateway operations including Douala for Cameroon, Chad and CAR; Congo Brazzaville, Equatorial Guinea and Gabon; Congo Basin: Pointe Noire for Congo, DRC, CAR, Cameroon; Tema for Ghana, Burkina Faso, Mali, Niger; Cotonou for Benin, Niger, Burkina, Nigeria and Durban for SADC.
The lively ensuing discussions suggested the following key messages on Aid for Trade and Trade facilitation:
- Despite the global economic downturn, there is need to ensure improved availability of funds for the Aid for Trade initiative as it provides substantial support to address the special needs of LLDCs.
- The critical need to avoid earmarking funding but ensure that all LLDCs are able to access and receive funds from all the existing trade facilitation initiatives including Aid for Trade.
- It is important to document trade facilitation measures that have worked and widely disseminate them to all LLDCs and replicate such projects in other countries.
- The need to address trade facilitation issues in a coherent manner ensuring that broader aspects of development are also addressed. For example trade facilitation efforts need to be accompanied by efforts to build productive capacity, promote value addition, diversification, ICTs, infrastructure development, and improved market access.
- Trade facilitation efforts should result in an increase in the capacity of LLDCs to undertake better trade instead of becoming just a raw material provider.
- Regional integration is important for successful implementation of trade facilitation initiatives.
- The need to start preparing for a new road map and the upcoming 10 year mark of the Almaty Programme of Action.