SMALL ECONOMIES Trade challenges for small economies

Many small economies face specific challenges in their participation in world trade, for example they lack economies of scale, have limited natural and human resources and face high transport costs for their exports. Some studies show that a small size may limit an economy’s possibilities to diversify local production and that this, in turn, could make it more difficult for small economies to fully integrate into the multilateral trading system.

back to top

Defining scope and identifying problems 

The Doha Declaration mandates, in its paragraph 35, the General Council to examine the problems faced by small and vulnerable economies and to make recommendations to improve the integration of such economies into the multilateral trading system. This is to be done, however, without creating a new or separate sub-category of WTO members. Discussions on the mandate have taken place since 2002 in the Committee on Trade and Development (CTD) meeting in dedicated session.


back to top

Work to date … 

The proponents of small economies, represented mainly by a group of landlocked countries and island nations, have started to identify various characteristics and problems specific to small and vulnerable economies. These include physical isolation and geographical distance to main markets, lack of adequate market access opportunities for their exports, a high degree of vulnerability and, in some cases, low levels of production, insufficient supply and low competitiveness. In an effort to move forward with the Work Programme, the proponents have started to present suggestions to other members as a first step towards drafting recommendations for actions which could be taken to assist small and vulnerable economies with their integration into the multilateral trading system.

On a parallel track, the proponents of small economies have recently started to present some of their concerns and positions to the DDA negotiating groups such as agriculture and NAMA. Some WTO members, however, and especially some developing countries which claim they are facing many of the same problems as those of the proponents, remain sceptical and have said they have difficulty forming trade-related responses to the concerns raised by the proponents. They view many of the issues identified by the small economies as either falling outside the scope of the WTO's work or as already being addressed in other negotiating groups. While some members believe that it is too early in the negotiations to address the issues of concern of small economies and that more work is required on finding trade-related solutions, others see a complementarity and view the parallel approach being taken in the dedicated session and in the negotiating groups as a way of moving forward and of addressing the specific issues of concern to small and vulnerable economies.