PRESS BRIEF

TRADE AND DEVELOPMENT

    All countries acknowledge the role played by international trade in economic growth and development. For the developing countries, experience has shown that those which aim at expanding their exports and adopting adequate and consistent national policies succeed in their economic objectives. They have been fully integrated into the changing world economy and are in a position to face the technological challenges.

    Not all countries have pursued such a strategy, however. While the developing countries have almost doubled their share of international trade - a share that now stands at 25 per cent - and diversified their exports, participation in trade by the 29 least-developed country (LDC) Members of the WTO has fallen, from about 1.4 per cent in 1960 to under 0.4 per cent in 1995. This "marginalization" is also seen in foreign direct investment, for the LDCs receive less than 2 per cent, whereas developing countries as a whole attract 37 per cent. These countries depend almost entirely on exports of a few commodities, minerals or tropical products, and they trade chiefly under regional preferential arrangements or generalized systems of preferences granted by developed countries. Special urgent measures are therefore needed to help them develop and diversify their trade, to draw benefit from the WTO trade system and to join the world economy on the eve of the twenty-first century.

    "The policital message from Singapore should be a message of unity among industrial countries and developing countries, and one of determination to help the least-developed come in from the margins through bold and specific measures. This ... is a particularly urgent need. An interdependent world means that we are all in the same boat together, and no one can watch with equanimity while the other end of the boat sinks" (Renato Ruggiero, Director-General, WTO).

    The WTO Director-General has, on a number of occasions, proposed the adoption of measures to assist the least-developed countries, more particularly at the G7 Summit in Lyon in June 1996 and at UNCTAD, International Monetary Fund and World Bank conferences. In Renato Ruggiero's view, measures should be taken in the following four fields:

1.    Comprehensive and prompt implementation of the Marrakesh Decision on the LDCs;

2.    improved market access for the LDCs and the elimination of all tariff and non-tariff barriers;

3.    an improved investment climate through negotiation, at the appropriate time, of multilateral investment rules in the WTO;

4.    assistance in institutional and human capacity building, by better coordination of technical cooperation, which might be done in particular through new information technologies.

    The developing countries now represent four fifths of the WTO's 128 Members. The Committee on Trade and Development (CTD), assisted by the Sub-Committee on Least-Developed Countries, monitors all aspects of the participation of these countries in the multilateral system - in particular the implementation of special provisions contained in all the WTO Agreements and the technical assistance activities organized by the WTO Secretariat.

    The CTD met four times in 1995 and has met eight times in 1996, a faster pace reflective of the growing will of WTO Members to engage in constructive action and to propose that Ministers should adopt concrete recommendations in Singapore.

Implementation of special and more favourable treatment

    The Uruguay Round greatly improved the market access of developed and developing countries by major tariff and non-tariff reductions scheduled over a period of five to seven years, depending on the country and the product (see Annex I).

    All the Agreements negotiated in the Uruguay Round and integrated in the WTO include special and more favourable provisions for the developing countries. Most often they ease the obligations of the LDCs, particularly by granting longer deadlines. Furthermore, many provisions in the Agreements recommend that developed countries should preserve the interests of developing countries when they adopt safeguard measures, sanitary and phytosanitary measures or technical standards, or in cases of dumping or subsidies by developing countries and in the settlement of disputes.

    Moreover, the Marrakesh Decision on the Least-Developed Countries stipulates that the various WTO bodies should display understanding and flexibility with regard to extending the additional deadlines and exemptions accorded to the LDCs.

    The Committee on Trade and Development focused on an overview of the implementation of these provisions, and considered that it was too early to evaluate the progress made. It noted that, even where the special provisions had been made available to them, the least-developed countries had not taken the requisite action to benefit from them and had made little use of them.

Guidelines for technical cooperation

    Many technical cooperation activities to assist developing countries were conducted for some 40 years by GATT (General Agreement on Tariffs and Trade), which was succeeded by the WTO in 1995. The WTO Secretariat organizes, inter alia, seminars and missions in these countries. On request, it provides specific technical cooperation to members of the government and officials in developing countries, informing them and advising them, more particularly in regard to their participation in the WTO's normal activities and in multilateral trade negotiations, as well as from the standpoint of accession to the Organization for countries applying for membership. The Secretariat also helps developing countries to better identify their trade interests and supplies them with the necessary statistical data and trade information. Furthermore, training courses in WTO activities have been organized twice a year since 1955 for representatives from developing countries.

    The emphasis is increasingly being placed on the African countries, which include many LDCs. An integrated technical assistance programme for eight African countries has been organized jointly by the WTO, UNCTAD and the International Trade Centre, a body for promoting developing country exports that is operated jointly by the WTO and UNCTAD. The countries are Benin, Burkina Faso, Côte d'Ivoire, Ghana, Kenya, Tanzania, Tunisia and Uganda. Seminars have also been organized in Africa, the Caribbean and the Pacific.

    Most of these activities are financed from the WTO budget, and the amount for technical cooperation stands at Sw F 2 million (approximately US$1.5 million). Additional contributions have been made by Japan, the European Community and New Zealand, and Norway has set up a US$2.5 million fund for operations for the least-developed countries.

    The high number of developing countries in the WTO (94 countries), the variety of the fields covered and the complexity of the rules would in themselves be enough to warrant strengthening and furthering the technical cooperation provided by the Organization. There are other factors: the globalization of the economy and the pace of technological change may well broaden the present gap between the wealthy countries and the others.

    Guidelines have been elaborated and will be submitted for the approval of Ministers in Singapore. In particular, emphasis will have to be placed on human resources and institutional and administrative capacity building in the developing countries, within WTO areas of competence, and the WTO's technical cooperation will be closely coordinated with that of other international organizations or bilateral institutions.

Participation of developing countries in the multilateral trading system and impact of the Uruguay Round

    The Committee on Trade and Development considered why some WTO developing country Members had been more successful than others in integrating themselves in the international trading system.

    The Members of the CTD discussed the matter on the basis of a WTO Secretariat study. They sometimes reached differing conclusions. For some, the reason for the difference in the economic performance of developing countries lay essentially in the domestic policies adopted and the existence or absence of a stable economic environment and a liberal trade regime. Others, on the other hand, took the view that this aspect came second and that trade barriers had played a more significant role. The same differences in views emerged in regard to the relative importance of domestic savings and foreign direct investment. It was also pointed out that investment had a role to play in development and that the terms of reference of the CTD and the Sub-Committee on Least-Developed Countries included the question of how to expand trade and investment opportunities.

Plan of action for the least-developed countries

    The Members of the WTO considered that urgent integrated action was necessary for these countries. They will be submitting a plan of action for the approval of Ministers in Singapore, advocating among other things:

    -    A review every two years, at the ministerial level, of the implementation of the Marrakesh Decision on the Least-Developed Countries;

    -    the introduction of close cooperation between all the major international organizations, including the OECD, to share in the work and to coordinate their actions. The first meeting should be convened in Geneva for early 1997. These organizations will, inter alia, need to study how to overcome bottlenecks in these countries' production capacity and help them to diversify exports. The WTO should also cooperate with other competent agencies in fostering a climate conducive to investment;

    -    the need for Ministers from developed and developing countries in Singapore to propose concrete improvements for market access and any other autonomous measures capable of assisting the least-developed countries.

ANNEX I

IMPROVEMENTS IN MARKET ACCESS RESULTING FROM THE

URUGUAY ROUND FOR DEVELOPING COUNTRIES

    The Uruguay Round has reduced tariff and non-tariff barriers encountered by developing country exports on developed markets by an average of 37 per cent over a period of five years (six years for agricultural products). This is a slightly lower percentage than the one negotiated for products of interest to the developed countries, because of a smaller reduction in tariff "peaks" (duties over 15 per cent) on sensitive products and those of interest to developing countries (textiles and clothing, fish, leather). However, the nearly 100 per cent binding of all customs duties by the developed countries has made for much more secure access to their markets.

    Again, duty-free access to the markets of the main developed countries has been considerably increased - in the United States it will be 40 per cent, compared with 10 per cent before; in the European Community 38 per cent compared with 24 per cent; in Japan 71 per cent compared with 35 per cent. The share of African exports with zero or under 3 per cent MFN duties has risen from 55 per cent to 78 per cent in Japan, and from 82 per cent to 85 per cent in the United States. On the other hand, it is true that tariff escalation, in other words, customs duties on the same product which increase in line with the degree of processing of the product, has been reduced but not eliminated.

    For the first time in a round of multilateral negotiations, the developing countries have actively participated in reducing tariff and non-tariff barriers, as far as they are able, and they have improved access to their own markets by an average of 25 per cent over seven years.

ANNEX II

LEAST-DEVELOPED COUNTRIES AND THE WORLD TRADE ORGANIZATION

WTO MEMBERS GATT CONTRACTING PARTY OBSERVER

(ACCEDING COUNTRIES)

OTHER LLDCS
ANGOLA ZAIRE CAMBODIA AFGHANISTAN
BANGLADESH NEPAL BUTHAN
BENIN SUDAN COMOROS
BURKINA FASO VANUATU ETHIOPIA
BURUNDI LIBERIA
CENT AFR. REP. LAOS
CHAD SAMOA
DJIBOUTI TUVALU
GAMBIA YEMEN
GUINEA BISSAU
GUINEA
HAITI
LESOTHO
MADAGASCAR
MALAWI
MALDIVES
MALI
MAURITANIA
MOZAMBIQUE
MYANMAR
NIGER
RWANDA
SIERRA LEONE
SOLOMON
TANZANIA
TOGO
UGANDA
ZAMBIA


END