Topics handled by WTO committees and agreements
Issues covered by the WTO’s committees and agreements


21 October 2000
WTO Seminar on Small Economies — Summary

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Summary  back to top

A seminar on Small Economies was held at the WTO on 21 October 2000. WTO members and observers met to examine two basic questions: the nature of the problems facing small economies and the possible solutions to those problems.

Because addressing the problems of small economies clearly requires a comprehensive and coherent approach that extends beyond the trade field, a number of other international organizations outlined during the seminar their technical assistance and capacity building programmes of special interest to small and vulnerable economies.

The problems  back to top

Members and observers identified the following factors of vulnerability for small economies:

(i) the limited size of their domestic market, reducing the scope for exploitation of economies of scale;

(ii) the limited diversification of their export structure, both in relation to the range of products and concentration on a few markets;

(iii) vulnerability to external and exogenous shocks, including natural disasters, and a limited adjustment capacity to these shocks;

(iv) remoteness from markets and transport costs;

(v) limited human resources and other factor endowments;

(vi) shortfalls in institutional and administrative capacity.

The possible solutions  back to top

Members and observers discussed the following potential solutions:

More open markets: while openness to trade may sometimes exacerbate vulnerability, such openness also affords the opportunity to develop global industries, beyond the limited local market, and can also be a motor for growth and development.

Internal reforms and policy measures: there was a broad agreement that internal reforms and policy measures, such as sound macroeconomic management and the resolution of civil conflicts, are critical in addressing the problems of the small economies and in determining their participation in international trade and the global economy.

New technologies: small economies must take advantage of technological developments.

Diversification of exports: diversification of production and trade is desirable but difficult to achieve as it often requires a significant amount of investment and training.

Increased market access: internal reforms and policy measures must be complemented by international endeavours. For example, exports of small economies often face high tariff rates and non-tariff barriers in foreign markets. There is a need for enhanced, secure and predictable market access for exports of interest to small and vulnerable economies.

Regional agreements: regional cooperation among small economies can help them overcome certain difficulties through the pooling together of their resources, including in international trade negotiations, at the bilateral, regional and multilateral levels. However, regional organizations cannot fully represent all the interests of member states.

Small economies also felt that they needed to take advantage of transitional periods for implementation of WTO commitments as well as technical assistance for capacity building in relation to the aforementioned areas of potential solutions to their problems.