10 May 2011

General Assembly DEV/2888

Department of Public Information • News and Media Division • New York

Thematic Debate Speakers at Istanbul Conference Say Supply-Side Constraints Hobble

 

Least Developed Countries, Despite Some Preferential Trade Terms

 

 

(Received from a UN Information Officer.)

 

ISTANBUL, 10 May — In order to benefit from access to world markets, it was vital for the poorest countries to increase their production capabilities in agriculture, industry and services, a high-level panel at the Fourth United Nations Conference on Least-Developed Countries agreed this afternoon.

 

“Our countries still face a number of challenges that hinder effective utilization of preferential market arrangements and integration into global trade,” Rupiah Bwezani Banda, President of Zambia said during an interactive panel entitled, “Harnessing Trade for Least Developed Countries’ Development and Transformation”.  A focus of the Istanbul programme of action, therefore, should be assistance in overcoming those challenges, primarily supply-side constraints.

 

Joining Mr. Banda as keynote speaker was Thongloun Sisoulith, Deputy Prime Minister and Minister for Foreign Affairs of the Lao People's Democratic Republic.  Leketekete Ketso, Minister of Trade and Industry, Cooperatives and Marketing of Lesotho and Peter Lilley, Member of Parliament and Co-Chair of Trade Out of Poverty of the United Kingdom served as co-chairs of the event. 

 

Trade accounted for 70 per cent of gross domestic product (GDP) in the least developed countries, but most of them exported raw materials, and they remained marginalized due to supply constraints, the co-chairs pointed out.  Transfer of technology, structural transformation, and other assistance was needed to overcome those constraints. 

 

In addition, the tariffs that remained on poor countries, despite their preferential treatment in some areas, had great impact, as did rules of origin and subsidy regimes, all of which needed to be altered in favour of those countries.  Barriers needed to be overcome in regional arrangements and South-South commerce as well.

 

Mr. Banda said that in the past 10 years, the Zambian Government had been able to mainstream trade policies into its development plans, in line with the 2001 Brussels Programme of Action.  Trade was among the key components of the country’s vision to become a middle-income country by 2030.  Trade liberalization, diversification of exports, regional arrangements, participation in the Doha Development Round at the World Trade talks had been part of that effort.  Reforms had focused on procedural bottlenecks that inhibited doing business. 

 

However, the challenges of production and transportation infrastructure needed to be addressed, he said.  The lack of progress in the Doha round was also exacerbating his country’s difficulties, as was a world trade structure rife with uncertainty.  Concerted efforts from all partners and stakeholders were needed to allow least developed countries to tap into high-value production chains.  The Istanbul programme of action should focus on all those areas.

 

Mr. Sisoulith, noting that the least developed countries held more than 15 per cent of the world population but accounted for only 1 per cent of trade, affirmed that supply-side constraints and stagnation in duty-free quota-free arrangements had continued to hobble those countries.  In his country, trade accounted for 25 per cent of GDP and it had been granted preferential treatment in many countries’ markets, in addition to participating in regional arrangements.

 

Yet, his country had not yet been able to take full advantage of those arrangements, owing to limited productive capacity, including of commodities that were vulnerable to external fluctuation of prices, he said.  The country was lacking transport and telecommunications infrastructure, in particular. 

 

To overcome such barriers, he maintained, the international community had an obligation to create an enabling environment for trade expansion by the least developed countries.  In that effort, it was important to intensify the Aid-for-Trade initiative and the Enhanced Integrated Framework, which were aimed at building the supply-side capacity and trade- related infrastructure.  The international community also could help induce more foreign direct investment from the private sector.

 

Following those presentations, a discussion was led by several featured discussants, including: Pascal Lamy, Director General of the World Trade Organization; Martin Khor, Executive Director of South Centre; Martin Tofinga, President and Executive Director of the Kiribati Chamber of Commerce and Industry; Camille Chalmers, Leader of the Haitian Platform for an Alternative Development; Abdullah Kahraman of Durman International Group, Turkey; and Ibrahim Turhan, Deputy Governor of the Central Bank of Turkey.

 

Discussants agreed that the problem was not that the countries concerned were not integrated into the international trading system, but the way they were integrated, relying on trade in raw commodities, which did not allow value enhancement and left them vulnerable to price fluctuations.

 

Speakers affirmed the necessity of assisting those countries to increase and diversify their productive capacity to redress that situation.  Mr. Khor said that that sometimes meant they should be allowed to impose protective tariffs so that cheaper foreign imports did not quash their nascent production efforts.  Mr. Kahraman said, however, that local currencies should be freed because even though that would make money easier to leave, it would also make it easier for money to come in. 

 

Mr. Tofinga said that the least developed countries should focus their efforts on industries in which they had comparative advantage.  In the case of Kiribati, that would be based on ocean access.  Mr. Lami said that although there had been good progress in unilateral trade arrangements, multilateral, predictable trade agreements had not progressed and developing countries had reason to be frustrated.  The Istanbul programme must move things forward on both access and production issues, just as the Brussels Programme did 10 years ago, he concluded.

 

In the final discussion, open to country representatives, civil society and private-sector actors, some speakers emphasized the need to increase the funding available to assist least developed countries to benefit more from trade.  Some criticized too-early liberalization of trade involving developing countries.  The representative of the United States, on the other hand, said that protectionism was hurting trade between poor countries.

 

China’s representative confirmed, from his country’s experience, that enhanced trade could indeed be a road to economic change, as the country had moved from thirty-second place to first place in exports in the world and had transformed its economy in the process.

 

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For information media • not an official record