Harnessing international trade and investment opportunities for LLDCs’ development (en)

Delivered by ITC Deputy Executive Director Dorothy Tembo at the LLDC II Conference on 05 November 2014 in Vienna, Austria.

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Excellences and Distinguished Delegates,

It is a pleasure to be with you today as we work together to transform how we think about LLDCs -- from land-locked to land-linked. The forward-looking, results focused programme we are developing here changes the terms of the debate from one centred on challenges to one that focuses on opportunities - including the opportunity to contribute to shaping the post 2015 Agenda.

For ITC, this means continuing to increase our focus on how we can help firms in LLDCs, especially SMEs, connect to markets and create business opportunities. To maximize the social returns on these investments, it is particularly important to create job opportunities that empower women and young people.

Trade, and in particular SME development, is a powerful engine for sustainable growth and job creation. Connecting to international production networks can revolutionize prospects for SMEs and their workers. This is why ITC is dedicated to working for SME internationalization and competitiveness for sustainable development.

To that end, I would like to underline two central points:

• One, the importance of regional integration as well as South-South cooperation, especially for landlocked developing countries in Sub-Saharan Africa. Landlocked countries need their neighbours even more than other countries do.
• And two, the role of Aid for Trade in connecting trade-related capacity building with the private sector. 

ITC, which is celebrating its 50th anniversary this year, is a 100% Aid for Trade organisation. We are a joint organisation of theUN and the WTO, with a portfolio of work that focuses heavily on the countries with the greatest trade and development challenges: least-developed countries, landlocked developing countries, and small island developing states. In 2013, fully 69% of our interventions were on activities in these three groups of countries.

LLDCs have particular constraints. But technological change and innovations in transportation are helping to liberate them from accidents of geography. Land-locked need not mean e-locked. Air transport doesn’t require ports. With the increasing role of services in manufactured trade, investing in people’s skills and in an effective business and regulatory environment are two fundamental policy areas where LLDCs must focus, and where ITC can be your partner.

During the 10-year period of implementation of the Almaty Program of Action (APoA), ITC has actively worked with LLDCs, especially in the areas of WTO accession and non-tariff measures. We are increasingly working with LLDCs on trade facilitation and services.

Our support for LLDCs in their WTO accession processes are in line with priority 3, paragraph 37 of the Almaty Plan of Action, which deals with international trade and trade facilitation. WTO accession has direct and tangible implications for the business community, as WTO rules shape the international and national trading environment in which enterprises operate. ITC builds private sector understanding of WTO issues and facilitates dialogue with the public sector so that LLDCs are positioned to take full advantage of WTO membership.

An example of this is our work in Lao PDR and Tajikistan. ITC provided support for both countries’ accession work by bringing the private sector actively into the long and often complex WTO process. Following their accession we have focused on assisting SMEs to exploit the new market opportunities offered by membership in the global trade body.

On non-tariff measures, we continue to deepen our interventions. NTMs, which include a variety of regulations such as technical requirements and standards, or rules of origin, represent significant obstacles to trade for many developing countries, especially for LLDCs. As tariffs on most products have come down around the world, NTMs have loomed steadily larger as factors limiting the ability of exporters and importers to fully integrate into the international trading system.

Through its programme on NTMs, ITC has worked with over 30 developing countries, including LLDCs such as Burkina Faso, Kazakhstan, Malawi and Rwanda, to identify and tackle the obstacles to trade.

ITC works to increase SME competitiveness and internationalisation in LLDCs. A strong strategic partnership with the Enhanced Integrated Framework has also been an important platform to build productive capacities. In close collaboration with EIF partners UNDP, UNIDO, UNCTAD, and the WTO, ITC has implemented projects to boost exports for poverty reduction and employment generation in LLDCs such as Chad, Lesotho, Malawi, Uganda and Burkina Faso. This will continue, as ITC remains a key partner for the EIF

Seizing the opportunities presented by South-South Cooperation is another avenue for increased work. ITC is working with China, India, Brazil and Turkey to facilitate the transfer of know-how; to better link investment opportunities with market opening; to help LLDCs and LDCs benefit from a trade landscape that has been transformed by the rise of the South and the predominance of multi-country value chains.

New opportunities need to be explored by the international community to support the sustained economic growth and sustainable development of LLDCs. ITC believes that a post-2015 development agenda should give particular attention to LLDCs. LLDCs are amongst the most vulnerable economies. Anchoring the special needs of LLDCs, particularly those related to trade development, in a post-2015 MDG planning process will focus international attention and help ensure a coordinated response. This has to be coupled with strong national ownership and better collaboration amongst Aid for Trade donors, to ensure resources are used effectively and in the interest of LLDCs.

The new Vienna Plan of action should include a focus on helping the private sector in LLDCs overcome its specific challenges and mobilize its capacities for achieving sustainable economic development. Some logical priorities would include: One, addressing non-tariff barriers to trade; two, lowering trade transaction costs; three, increasing productive capacities; and four,enabling trade in services.

I will look a little more at each of these in sequence.

First, non-tariff barriers. 
Based on ITC survey work the private sector in LLDCs is seriously affected by non-tariff barriers and procedural obstacles. Rules of origin and technical measures (the requirements themselves as well as the associated conformity assessments), together with pre-shipment inspection and other customs formalities, account for a large part of the NTMs identified as burdensome by exporters. This points to the necessity of enhancing the transparency of procedures, the capacities of enterprises to meet international standards, and enhancing trade facilitation procedures.

This leads us into our second reommemndation: trade facilitation.
Effective trade facilitation especially critical for landlocked countries. Lowering trading costs and times can be an engine for boosting the competitiveness of small and medium enterprises (SMEs) in LDCs. In light of the WTO Trade Facilitation Agreement, the new programme of action for LLDCs should call for assisting the private sector to manage cross-border operations efficiently, thus contributing to business competitiveness.

Third, building productive capacities.
Given the social and economic challenges facing LLDCs, the international agenda must focus on building productive capacities and trade promotion to facilitate economic diversification and employment creation. This would also enable LLDCs to take greater advantage of existing benefits from regional integration and free trade agreements.

Finally, enabling trade in services.
Efficient services such as air-transport and telecommunications play an important role in helping the private sector in LLDCs effectively link with international markets. Services has a huge potential in contributing to diversification and value-addition in LLDC economies. It needs to be considered not only as an enabler but as a sector that in itself is full of opportunity. However, trade in these key facilitating services is often highly restricted. A key priority for a new LLDC programme of action should include building an enabling policy environment for trade in services, particularly sectors crucial to LLDCs such as information technology services, education, and construction. The new framework should call for assisting LLDCsdevelop and increase their services exports, as they are less sensitive to constraints imposed by transport and distance.

I thank you for your attention.