News Brief

12 December 2011
ITC News

Non-tariff barriers set back trade in South Asia 

On October 22 and 23, the fourth edition of the South Asia Economic Summit (SAES) was held in Dhaka, Bangladesh. The summit aims to advance regional integration in South Asia through dialogue on economic issues. At the summit, trade and industry leaders stressed that non-tariff barriers, a lack of connectivity, informal trade, rigid borders and a lack of banking facilities in border areas are the major barriers to trade growth in this region. They mentioned textiles and garments as an example where South Asian Association for Regional Cooperation (SAARC) member countries trade only 18% of textiles among themselves, although India, Pakistan, Sri Lanka and Bangladesh are strong global players in textiles and garments. Most SAARC trade takes place on a supply and demand basis, not through agreements. As a result, SAARC countries lag behind other trade blocs, such as the Association of Southeast Asian Nations, in intraregional trade.

India, Brazil and South Africa pledge to boost trade 

At the India, Brazil and South Africa Summit on 18 October, discussions focused on growing concern with the global financial crisis, with President Zuma of South Africa reminding participants of measures being taken: ‘We continue to collaborate closely in areas such as the G20, BRICS, WTO and G77 plus China regarding economic and financial issues.’ The impact of the euro zone’s financial woes was high on the agenda, with the leaders urging European governments to take measures to prevent the crisis from spreading. India, Brazil and South Africa boosted their ability to withstand the euro zone crisis by diversifying their trade partners and increasing cooperation among other developing countries. The three emerging economies managed to surpass an intra-country trade target of US$ 15 billion set during the summit’s inaugural meeting in 2003, achieving US$ 16.1 billion in 2010 and on track to reach the 2015 target of US$ 25 billion.

Further delay in implementing action programme for least developed countries 

Delegates at the United Nations Second Committee (Economic and Financial) held on 21 October warned that further delaying the practical implementation of the Istanbul Programme of Action for least developed countries would lead to a further deterioration in the lives of hundreds of millions of people. The Istanbul Programme of Action was adopted last May at the Fourth United Nations Conference on the Least Developed Countries (LDCs) and lists eight priority areas, including productive capacity and human and social development. At the meeting, representatives from least developed and landlocked developing countries, as well as small island developing states, stressed the vital importance of fair trade, greater investment in infrastructure and increased aid flows. Representatives pointed out that LDCs face an unfair trading system and called for developed countries to mobilize resources for Aid for Trade while creating favourable market access conditions for all products originating in least developed countries.

Regional forum charts the way forward 

At the end of September, the East African Community, the Common Market for East and Southern Africa, the Southern Africa Development Authority and the Inter-Governmental Authority on Development met to find ways to accomplish infrastructure projects on the continent. Trade between African nations is the lowest in the world, estimated at just 3%, compared with Europe at 62% and 40% in Asia. The problem lies mostly in poor transport and the lack of other vital energy and telecommunication linkages. These make doing business very expensive. According to experts, it costs US$ 1,500 to transport a 20-foot container from Japan to the port of Mombasa, but it costs up to US$ 5,000 for the same container to reach Bujumbura in Burundi. In response, countries in eastern and southern Africa are pushing for joint infrastructure projects under the Aid for Trade initiative, with an emphasis on developing transport corridors. The regional forum is pushing for harmonization of infrastructure master plans by different countries, and is seeking to develop joint financing and implementation mechanisms for infrastructure development.

Developing nations key in COP17 agenda 

The 17th Conference of the Parties (COP17) to the United Nations Framework Convention on Climate Change (UNFCCC) and the 7th Session of the Conference of the Parties serving as the meeting of the parties (CMP7) to the Kyoto Protocol was held from 28 November to 9 December in Durban, South Africa.

Financing plans, focusing on the role of developing nations and the private sector, were key items on the agenda at COP17, including two for green economic development. This includes the finalization of the roll out of the Green Climate Fund, agreed upon at the 2009 conference in Copenhagen, aimed at paying for renewable energy projects in developing nations. Although there is agreement that, by 2020, US$ 100 billion per year in climate finance will be forthcoming, its sources are still highly uncertain, as is the portion of this that would flow through this fund. A transitional committee, made up of representatives from 25 developing and 15 developed countries, designed the fund and made a recommendation for COP approval.