Expanding trading opportunities for developing countries

An open international trading system offering the fullest access to export markets is a major parameter in sustaining the export growth of developing countries. Efforts to enlarge and improve the export market opportunities of developing countries are pursued in several contexts: through multilateral trade agreements, through regional integration and trade arrangements, and through bilateral and plurilateral trade agreements.

At the multilateral level, a major undertaking in recent years has been the seven-year-long Uruguay Round multilateral trade negotiations under the auspices of the General Agreement on Tariffs and Trade (GATT). As mandated by the Punta del Este Declaration of 1986, the negotiations have covered the following subjects: tariffs, non-tariff measures, tropical products agriculture, natural resource-based products, textiles and clothing, safeguards, MTN agreements and arrangements (including anti-dumping, import licensing procedures, etc.), subsidies and countervailing measures, dispute settlement, TRIPS, TRIMs, FOGS and services.

While several of these subjects fall within the traditional category of market access issues, the focus of efforts to improve market access for goods and services have gone beyond the traditional consideration of border measures, such as tariffs and quantitative restrictions, that have been the focus of previous Rounds. Also, several of the issues covered by the negotiations fall within the category of rule-making and institutional matters which have a bearing not only on the distribution of rights and obligations within the multilateral trading system, but also on the competitive environment for the conduct of international trade and the scope for domestic policies to encourage the development of export industries.

The results of the Uruguay Round are likely to have a major impact on the trading opportunities of developing countries. Given the complex set of agreements that will have emerged, covering the wide variety of areas indicated above, technical cooperation activities will be crucial not only for assisting developing countries to implement the results of the Round through, inter alia, the adaptation of their national laws and regulations to bring them into conformity with the MTN agreements, but also for helping developing countries to identify and take full advantage of the trading opportunities available under the new multilateral framework for international trade.

With respect to export market opportunities, technical cooperation could aim to assist developing countries, inter alia, with information on the remaining trade control measures (e.g. by providing databases and information systems on trade control measures in major markets) affecting various sectoral categories of goods of export interest to developing countries; advisory and training services to strengthen national capacities to formulate and implement export strategies in the context of the new international trade rules (agreements) affecting market access; identification of opportunities to increase developing countries' participation in trade in services; identification and analysis of issues relevant to the export opportunities of developing countries for possible future trade negotiations.

Other related trade arrangements that are likely in the years ahead to be of continuing relevance for enlarging and improving export market opportunities of developing countries include the Generalized System of Preferences (GSP) accorded by developed countries to developing countries, the Global System of Trade Preferences (GSTP) among developing countries, regional integration and trade arrangements among developing countries, and bilateral and plurilateral agreements between developed and developing countries such as, for example, the Caribbean Basic Initiative, the North American Free Trade Agreement (NAFTA), the Lomé Convention and other trade agreements concluded by the EEC/EU with developing countries. In this context note should be taken of the possibilities for increased trade between developing countries and countries in transition in central and eastern Europe.

The need for technical cooperation in the broad area of special trade arrangements include: (a) identification of ways and means for improving the GSP and other preferential trade programmes to enhance their contribution to expanded export opportunities for developing countries; (b) technical support, including advisory services, to strengthen subregional, regional and interregional economic integration and trade arrangements among developing countries; (c) assistance in identifying and taking advantage of trading opportunities for developing countries with countries in transition in central and eastern Europe, including inter alia, collection and dissemination of information on the changes and reforms in the foreign trade policies of these countries, and identification of new ways and means of expanding trade with these countries, particularly through the new operators and payments arrangements; and (d) assistance in monitoring and analysing possible implications of major regional integration arrangements on the export market opportunities of developing countries, including the North American Free Trade Agreement (NAFTA), the creation of a single market by the European Community's (EEC/EU) Europe Agreements with certain central and eastern European countries in transition, and various integration groupings among developing countries.

There are three general international trade issues which are likely to come to the fore in the post-Uruguay Round period, and which have an important bearing on the export market opportunities of developing countries. These concern the impact that environment measures, structural adjustment policies and restrictive business practices and competition policies can have on market opportunities.

From an environmental perspective, the expansion of trading opportunities for developing countries can involve both actively seeking new market opportunities through the promotion of environmentally friendly products, and seeking to mitigate any adverse effects of environmental regulations, policies and standards upon their exports. Increasingly, environmental features, in addition to price and performance, are becoming a factor in determining consumer demand. Also, environmental regulations are creating new opportunities for business firms and exporters dealing with innovative, environmentally friendly technologies and products. "Green consumerism" may therefore offer manufacturers and exporters market opportunities which would allow them to gain the loyalty of environmentally conscious consumers.

However, environmental regulations and standards may also adversely affect the trading opportunities of developing countries by reducing the competitiveness of their exports, or in some cases even denying them access to certain markets. There are a number of reasons. For one thing, lack of information on existing and emerging environmental standards in their major markets and unfamiliarity with the administrative and testing procedures for environmentally based products certification may place developing country exporters at a great disadvantage. Secondly, the cost of compliance with standards arising in overseas markets could be high if it has to be borne exclusively by the export trade. If standards differed significantly between various export markets this problem would be compounded. Thirdly, if environmentally sound production processes and technologies have to be imported from developed countries, this could imply a capital outlay that is burdensome for capital-scarce developing countries.

Technical cooperation activities could aim to bridge the information gap of developing countries with respect to environmental regulations in major markets, to ensure greater coordination among governments in the setting of environmental regulations and standards (including eco-labelling) and to reduce the cost of compliance by developing countries, particularly the least developed among them, with environmental standards higher than have existed hitherto in the world economy.

In a more open international trading system, the process of globalization of production and trade will put increasing focus on structural adjustment policies and their impact on export opportunities. The interests of all countries converge in having a dynamic process of change and adaptation to shifting comparative advantage and international competitiveness, and they have a common stake in policies and measures which facilitate this process. There is now compelling evidence that developed market-economy countries need to restructure or to disengage from production sectors in which they are losing competitiveness in international trade. Some more advanced developing countries may find themselves increasingly in the same position. The economies in transition face a similar problem but on a larger scale. They are having to rehabilitate almost their entire productive bases that have, by and large, lost competitiveness. Many developing countries are still engaged in a development process which involves the building of supply capabilities on a broader base rather than the restructuring of individual production sectors. Many developing countries still require external support in this regard.

Technical cooperation activities could focus on identifying sectors which need to undergo structural adjustment from the global point of view, the types of adjustments that would be required and feasible, and the policies and measures that would be appropriate.

The restrictive business practices of private firms, including the anti-competitive behaviour of large firms in domestic and international markets, can impede or negate the market opportunities of developing countries that arise from the liberalization of tariff and non-tariff measures affecting international trade. Although competition laws and regulations are often in place and enforced on the national level, in the international arena this is less so, or not at all. Developed and developing countries should expand their efforts to control Restrictive Business Practices (RBPs) which adversely affect their trading opportunities by strengthening cooperation and consultations in areas where there is an interface between trade and competition policies.

Although real progress could be achieved if all countries adhered to the provisions of the United Nations Set of Multilaterally Agreed Equitable Principles and Rules for the Control of Restrictive Business Practices (RBPs), there may be need for a new multilateral normative framework to define and structure the links between competition and trade policies. By linking competition and trade policy, the private firms' barriers to trade would thus be brought into the disciplines of the international trading system. This would safeguard the benefits of trade liberalization, reflect the realities of global competition and ensure a "level playing-field" for all trading firms and all countries, particularly developing countries and their firms.

In addition to assisting developing countries in the formulation and/or implementation of legislations and procedure for the control of RBPs, technical cooperation activities could aim at: providing information and analyses of the impact of RBPs on international trade, as well as the interface between competition and international trade with particular emphasis on the trading opportunities of developing countries; and developing guidelines on competition policy in international trade.

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the UN Commission on Sustainable Development and implemented through national and local authorities.