Promoting commercial interests of developing countries

An important challenge for the international community is to secure the integration of developing countries, including the structurally weak, vulnerable and small economies and countries in transition, into the globalizing world economy and to reduce the risk of marginalization. The coherence and consistency of macroeconomic policies must be enhanced at the national, regional and international levels.

It is clear that while the rules-based system seeks to establish a level playing field, remaining trade barriers have a negative impact, particularly on developing countries. Whilst trade barriers in the main markets are now generally low for most trade of developed countries, there is a lack of equal opportunities for developing countries' exports in the present system. Thus, a number of export products of particular interest to developing countries such as textiles are often subject to high import barriers, including non-tariff barriers.

Unlike the industrial sector of trade in goods, the multilateral trade rules relating to agriculture permit the payment of large transfers to agricultural producers in some countries. This support for agricultural production and exports in developed countries can have significant distorting effects, particularly on developing countries. And high protection for the domestic food industry in some developed countries hampers diversification and value-added production in developing countries.

Anti-dumping measures and countervailing duties are used by many countries in sectors where exporters from developing countries are competitive. Further, there is an asymmetry between liberalization of trade in goods and services on the one hand and labour-intensive services on the other, which particularly affects developing countries.

The Uruguay Round negotiations focused on achieving tariff liberalization but left tariff peaks and escalation in a significant number of products, including those which are of interest for developing countries. Furthermore, the tariffication of quotas and other non-tariff measures in the agricultural sector was reflected in a number of high tariffs, with the access opportunities in many sectors being provided only within tariff quotas. The textile and clothing sector, of vital interest to many developing countries, is subject to declining quantitative restrictions until 2005, with the most meaningful liberalization of existing quotas coming last.

The General Agreement on Trade in Services (GATS) provides a very useful framework for liberalization, in particular through its flexible structure which allows countries to liberalize at their own pace, in line with their development situation. The GATS explicitly states as an objective that of facilitating and increasing the participation of developing countries in trade in services. However, the actual degree of market access commitments on trade in services entered into by countries varies considerably among sectors and in relation to individual modes of supply; market access conditions for commercial presence have been emphasized, rather than the movement of service providers as natural persons. Countries have also negotiated exemptions from MFN under the GATS, and attached them as lists of exemptions thereto. Considerable scope thus remains for further liberalization in a range of service sectors, particularly those of special interest to developing countries.

Another issue requiring attention relates to the fact that many developing countries face problems when trying to diversify into higher value-added and manufactured exports with more dynamic demand prospects. Barriers to entry in those sectors where they should have the best chance of exporting need to be addressed, such as textiles, clothing, and the food industry.

The Generalized System of Preferences (GSP) has played a significant role in providing preferential market access opportunities to many developing countries and still remains an important instrument for potential further liberalization of market access for many developing countries, although there has been an erosion in the margin of preferences as a result of MFN-based tariff reductions. Many developing countries benefit from special preferential arrangements such as the Lomé Convention and the Caribbean Basin Initiative (CBI).

Market access conditions for agricultural and industrial products of export interest to least developed countries (LDCs) should be improved on as broad and liberal a basis as possible and urgent consideration should be given to the proposal for a possible commitment by developed countries to grant duty-free and quota-free market access for essentially all exports originating in LDCs and other proposals to maximize market access for LDCs. Consideration should also be given to proposals for developing countries to contribute to improved market access for LDCs' exports. All countries that announced market access commitments at the High-level Meeting on Integrated Initiatives for Least Developed Countries' Trade Development in October 1997 are invited to implement these commitments fully and expeditiously.