Tuesday, November 4, 2008

Poorest countries must improve trade capacity - WTO

The world's poorest countries need to get more competitive at producing and exporting goods in order to take advantage of preferential access offered by rich countries, an internal WTO report says.

But many Least Developed Countries (LDCs) find their export opportunities limited because not only do they struggle to produce goods efficiently enough, but they also find it difficult to deal with the complex rules and standards imposed by many importing countries.

In 2006 79 percent of LDC's exports entered developed countries duty-free, said the World Trade Organisation study, dated Oct. 14 and circulated on the WTO website.

"While the market access issues are being addressed at the WTO negotiations, the LDCs as well as the international community should continue to give full attention to enhance the capacity of LDCs to produce more tradable products at competitive prices," it said.

Not all LDC products enjoy duty-free access, with textiles and clothing products from some of Asia's poorest countries facing high tariffs in the US market, for example.

So only 70% of LDC non-agricultural products enter developed markets duty-free, against 90-100 percent duty-free entry for farm and mineral products, it said.

The study noted that LDC exports of goods and services grew by 19,6 percent in 2007, below the 29 percent average for the three preceding years, but outperformed growth in world trade for the seventh consecutive year.

LDC export earnings tripled to $138-billion in 2007 from $42-billion in 2000.

A major source of this growth is the rise since 2003 in the prices of fuel and mining products, which now account for 58 percent of LDC exports.

As a result, the LDCs swung out of their traditional trade deficit in 2006, and maintained the surplus in 2007.

Earnings from services are also growing rapidly, rising 21 percent in 2007, the WTO noted.

But despite this dynamic performance on goods and services exports, LDCs remain a marginal player in world trade, accounting for only 0,8 percent of global exports and imports.

Fuel and mineral products have risen as a share of LDC exports to reach 60 percent in 2006, while clothing and food combined have declined to a 22 percent share.

In 2006 the United States overtook the European Union as the biggest market for LDC exports, while the share of exports going to developing countries rose to 45 percent that year, including 19 percent going to China, now the third biggest destination.

The main category going to developed countries is textiles and clothing, while developing countries take minerals, fuels, wood products, cotton, copper, vegetable and oil seeds.

The United Nations classifies about 50 countries as LDCs, based on criteria of low income (gross national income per head of $750 for addition to the list, and $900 for graduation from it), human assets such as health and welfare indicators, and economic vulnerability.