Services in Global Value Chains: Opportunities and Challenges for LDCs

Delegates and private-sector representatives from least developed countries (LDCs) last week came together with experts from ITC and the World Trade Organization to discuss the opportunities that trade in services provides to LDCs seeking to enter global value chains (GVCs).

The 27 March seminar, the fourth in a series organized by ITC on issues facing LDCs in services negotiations, addressed how LDC policymakers in multilateral trade negotiations can seize these opportunities, and how LDCs can strengthen their collective position at the multilateral level. The seminar, which was held at WTO headquarters in Geneva, was funded by the Australian government.

A key message to emerge from the seminar was the vital role played by the services sector in driving competitiveness across the economy as a whole: an efficient domestic services sector is an essential ingredient for any country seeking integration within GVCs.

Through deliberate national policy planning and public/private dialogue, LDCs can position themselves as niche services exporters. Delegates heard how Rwanda, for instance, is successfully transitioning from an agricultural to a services and knowledge-based economy, establishing itself as a tourism—and particularly a MICE (meetings, incentives, conference and exhibitions)—destination by investing in related services along the tourism value chain, including security, audio-visual, construction, transport and logistics services. Also highlighted was the case of Uganda, which in recent years has established itself as a leader in African epidemiology and public health, as illustrated by the country’s leading role in dispatching health experts to West Africa during the Ebola crisis.

The discussions highlighted the critical importance of a holistic negotiating strategy to ensure that LDCs can create enabling environments for domestic services providers—and consequently whole economies—to thrive. To this end, Diane Sayinzoga from the Services Division of the Rwanda Development Board encouraged LDC delegates from African countries in particular to approach multilateral trade negotiations collectively, in order to secure the best outcomes for LDCs in the region.

The discussions also highlighted the challenges for LDCs wishing to integrate within GVCs. Paul Gitta of the Uganda Export Promotion Board explained that many services SMEs in Uganda operate informally, making it difficult for policymakers to communicate the outcomes of trade negotiations and to ensure compliance with domestic and international regulatory standards. The paucity of accurate data on services trade presents a further challenge, inhibiting forward planning and deliberate national policy designed to increase services competitiveness.

LDC stakeholders involved in multilateral and regional services negotiations were encouraged to petition collectively for effective and holistic regulation across the services sector generally in order to increase competitiveness, with key priorities including, but not limited to: the liberalization of telecommunications and financial services; a common offering among African LDCs on tourism services; and improved access to construction markets both domestically and regionally.

The seminar also witnessed the circulation of a second installment in ITC’s LDC Services Snapshot series, which was launched at the previous seminar in February. The concise Services Snapshots are intended to redress, at least in part, the systemic lack of official statistics on services trade for many developing countries.

ITC also announced its forthcoming Guide on how LDCs can benefit from operationalization of the services waiver, which is now in its critical phase.
Seminars five and six of the LDC Geneva Practitioners series follow in April and May 2015.

For more information on the seminar series, please click here.