Building trade capacity for landlocked countries

At the official opening of the World Export Development Forum 2023, hosted in Ulaanbaatar, Mongolia, Ms. Rabab Fatima, the United Nations Under Secretary General and High Representative for the Least Developed Countries , Landlocked Developing Countries, and Small Island Developing States , addressed the international trade audience, sharing her insights on the theme “Vision to diversify trade in ways that are green, digital, and organic – and bring small businesses into regional and global trade.”

Fatima revealed the challenges and opportunities faced in the contemporary world of international trade through the lens of  LDCs, LLDCs, and SIDS. These countries represent the 92 most vulnerable nations, each with an export share below 1% of the total global trade.

First and foremost, it is important to acknowledge the intrinsic power of trade in driving economic growth for any nation. However, she also highlighted the obstacles that land-locked countries encounter in their pursuit of economic development, particularly in the context of climate change.

One of the major issues faced in accessing markets is the higher transit transport costs incurred by these nations due to their remoteness from major global markets, which, she stated, “contributes to much higher transit transport costs for landlocked developing countries, leading to increased greenhouse gas emissions and further exacerbating climate change.”

Recognising such a critical inter-connection, Fatima called for a fundamental re-evaluation of trade composition and patterns, asserting the imperative to minimise the carbon footprint while achieving rapid economic growth.

Furthermore, Fatima elucidated the array of obstacles that impede the participation of Micro, Small, and Medium-sized Enterprises (MSMEs) from developing countries in international trade.

She noted, “Many obstacles are internal in nature and are primarily related to managerial skills, workforce capacity, and the capability to adopt new technologies.”

Alongside these internal challenges, MSMEs also face significant financial constraints that restrict their ability to access global markets. Limited access to foreign distribution networks, along with complex border regulations and compliance with international standards add another layer of complexity, further exacerbating the plight faced by these nations.

Fatima brought attention to the marginalisation of LDCs, LLDCs, and SIDS in the organic food sector. Despite the organic food market being valued at nearly $500 billion, she pointed out the prevailing regional disparity in market share, stating, “North America and Europe account for the majority of organic product sales, with a 90% market share.”

In light of this disparity, she called for governments and financial institutions to support these nations in advancing their domestic farming practices and allowing them easier entry to external markets through simplified regulations and certifications.

Moreover, Fatima discussed the role of digitalisation in reducing barriers to international trade, acknowledging the benefits of digitalisation in reducing transit-transport costs for LDCs, LLDCs, and SIDS. However, she cited the unequal accessibility to digital solutions that became apparent during the pandemic, stating, “While developed countries could turn to digital platforms to continue business during the lockdowns, this was not an option for most businesses in the LDCs, LLDCs, and SIDS.”

In an effort to build actionable momentum, Fatima put forth the following set of measures, urging the international trade community to actively support and implement actions to address the marginalisation of (LDCs), (LLDCs), and (SIDS) within the global trading system:

  • Build trade capacity at a massive scale: This entails developing robust infrastructure, enhancing connectivity, streamlining customs procedures, and promoting regional integration. These ambitious initiatives will empower marginalised nations to strengthen their resilience against volatile market conditions. Additionally, it is imperative to extend unwavering support to women-led businesses, creating an inclusive business environment that unlocks the transformative potential of women.
  • Support digital ecosystem development: Establish essential digital infrastructure, promote fintech and mobile banking, and formulate transparent and equitable regulations to facilitate access to digital trade and the e-commerce world.
  • Aid for Trade: Leveraging the initiative to boost climate-resilient trade capacity and infrastructure, enabling these nations to embrace a green economy and stimulate organic production.
  • Facilitate technology transfer: Provide affordable access to modern technologies, especially renewable technologies, aligning with the implementation of Article 66.2 of the Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS).
  • Technical assistance: Support these countries in meeting organic standards in international markets and enable their active participation in international standard-setting bodies through assistance under the Technical Barriers to Trade (TBT) and Sanitary and Phytosanitary (SPS) Agreements.
  • Engage the private sector: Encourage the active involvement and collaboration of the private sector with governments and development partners to drive economic growth, create employment opportunities, and promote inclusive and sustainable trade.

Through the dedicated commitment and actions of the international trade community, marginalised countries can have the opportunity to embark on their transformative journey towards rapid economic growth and sustainable development.

(source: trade finance global)

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