Ministers and senior government officials from the world’s 32 landlocked developing countries (LLDCs) are meeting in Geneva this week to discuss how they can best enhance their trading capacity, bring structural transformation and sustainable development.

The two-day meeting, running from 23-24 June 2016, will focus on ways in which landlocked developing countries can best utilize recent global development commitments to enhance their trade potential and overcome many of their specific structural and geographical challenges. Ministers will also discuss the importance of the early ratification and subsequent implementation of the World Trade Organisation (WTO) Trade Facilitation Agreement which has important provisions for transparent and efficient transit procedures and if fully implemented will be beneficial to landlocked developing countries.

“The 2030 Agenda for Sustainable Development and the Addis Ababa Action Agenda acknowledge that international trade contributes to the promotion of sustainable development and is vital for inclusive economic growth and poverty reduction,” said Gyan Chandra Acharya, Under-Secretary-General and High-Representative for Least Developed Countries, Landlocked Developing Countries and Small Island Developing States. “It is critical that landlocked developing countries harness these commitments to strengthen productive capacity, build trade related infrastructure and ensure unhindered and efficient transit facilities for their products in the global markets.”

Long distances from seaports, poorly developed transit and transport systems and reliance on neighbouring transit countries for transit access, translate to high trade costs for landlocked developing countries. These high trade costs have impacted landlocked developing countries’ trade competitiveness. They continue to be marginalized in international trade, accounting for only 1 per cent of global merchandize exports. Landlocked developing countries rely heavily on primary commodities, which have little or no value added to them, lack of diversification of both exports and imports, and vulnerability to volatile prices of commodities and external shocks.

“LLDCs face very high trade costs due to their geographical characteristics. This can hit their ability to use trade as a tool for growth. International cooperation and dialogue will be key in addressing these issues, and the WTO can keep contributing to these efforts in a number of ways,” said WTO Director-General Roberto Azevêdo.

“Capacity-building work through the WTO Aid for Trade initiative is important, and the LLDCs are major beneficiaries of this work. Implementing the WTO’s Trade Facilitation Agreement will also be crucial. LLDCs had a prominent voice in the negotiations which led to this Agreement, ensuring that it tackles delays in transit which can have a significant effect on these economies. We expect that, when fully implemented, the Agreement could reduce trade costs in LLDCs by over 15 per cent on average. WTO and UN-OHRLLS are committed to working to ensure that LLDCs can leverage trade to help deliver on their development goals, and I am glad to strengthen that partnership today.”

The Fifth Meeting of Trade Ministers of Landlocked Developing Countries is co-organized by the United Nations Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States and the World Trade Organization.

In 2014 the Second United Nations Conference on Landlocked Developing countries came out with the Vienna Programme of Action for Landlocked Developing Countries, a 10-year blueprint for their sustainable development, which underscores the commitment of the global community to support landlocked developing countries in dealing with challenges related to landlockedness, remoteness and geographical disadvantages.

With the theme Harnessing the trade potential of the LLDCs to implement the Vienna Programme of Action for landlocked developing countries and the 2030 Agenda for Sustainable Development, Ministers attending in Geneva will share ideas, lessons learned and good practices on how to improve the trade potential of their countries and to enhance their meaningful integration into the world economy.

Ministers of Trade of landlocked developing countries held their inaugural meeting in 2005 and over the years the trade ministerial session has become a regular event for discussing critical issues related to enhancing their trade potential and forging a common position on key issues on the international trade agenda.

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Harnessing the trade potential of the LLDCs to implement the Vienna Programme of Action for landlocked developing countries and the 2030 Agenda for Sustainable Development

Statements at the 5th Meeting of Trade Ministers of LLDCs, 23-24 June 2016

Remarks by WTO Director-General Roberto Azevêdo

Welcome to Geneva, and to the WTO.

Let me start by paying tribute to Under-Secretary-General Acharya.

It was his suggestion that we jointly organize this Fifth Meeting of Trade Ministers of Landlocked Developing Countries.

So let me commend him for his initiative.

I think that our discussion today is clearly in tune with the global debate.

Trade is a key element of the Sustainable Development Goals, which were agreed by global leaders last year. They recognized trade as an engine for inclusive economic growth and poverty reduction.

The Addis Ababa Agenda for Action on Financing for Development reinforces that message.

And, looking specifically at the LLDCs, the Vienna Programme of Action also features trade as a way to accelerate sustainable development.

Indeed, I was pleased to be with you in Vienna in 2014 to launch the Programme of Action. And the WTO has worked closely with the UN on this front.

It is a good example of the work we do to address the concerns of the LLDCs in both our organizations.

So I am glad to strengthen that partnership today. We must continue working to ensure that LLDCs can leverage trade to help deliver on their development goals.

Clearly, due to their geographical characteristics, LLDCs face very high trade costs.

According to the World Bank, these costs can be twice as high as those of coastal countries. And so they act as a brake on the trading potential of LLDCs.

In 2014, LLDCs accounted for only around 1.2 per cent of global merchandise exports. Generally speaking, coastal countries do over 50 per cent more trade than their landlocked neighbours.

Clearly, we must act on this.

Addressing the trade-related challenges of LLDCs requires approaching this from many angles.

International cooperation and dialogue will be key here, and I think that the WTO can keep contributing to these efforts in a number of ways.

First, through our capacity-building work, the WTO helps LLDCs address their constraints to trade.

Through our Aid for Trade initiative, the WTO has helped to mobilize resources for the LLDCs, in order to build supply capacity, strengthen trade-related infrastructure, and add value to exports.

LLDCs are a big beneficiary of this programme. In 2014, donor commitments for the LLDCs were just over 10 billion dollars. This is an increase of almost 140 per cent compared to when the initiative was launched a decade ago.

And projections by the OECD indicate that Aid for Trade flows will remain relatively stable in the coming years.

However, we must ensure that resource mobilization efforts are maintained and strengthened.

The theme of the Aid for Trade Work Programme for 2016 and 2017 is ‘Promoting Connectivity’.

It looks at how we can better help developing countries connect to trade, including the LLDCs.

This work will culminate in the Sixth Global Review of Aid for Trade which will take place next summer.

So I urge you to be fully involved and participate in the preparations for this next Global Review.

So capacity building is one major avenue through which the WTO can support LLDCs to trade. Another is through our work to keep updating the global trade rulebook, and agree new deals.

For a long time, global trade negotiations struggled to deliver concrete results. But we have started to change that.

In 2013, at our Ministerial Conference in Bali, we delivered a set of very important decisions, including the Trade Facilitation Agreement.

And this is of special interest to LLDCs.

This agreement is about streamlining, simplifying and standardising customs procedures, thereby reducing the time and cost of moving goods across the border.

We expect that, when fully implemented, the Agreement could reduce trade costs in LLDCs by over 15 per cent on average. That’s over 19 per cent for manufactured products, and over 11.5 per cent for agricultural products.

In addition, by reducing the costs associated with exporting, the Agreement will make it possible for smaller enterprises to join international markets. This will help to ensure that international trade is truly inclusive and aligned with the SDG principle that no-one should be left behind.

So these reforms will make a big difference.

The Agreement could almost have been designed specifically to address some of the major problems that LLDCs face. And that’s for a simple reason – it was designed for that purpose!

LLDCs had a prominent voice in the negotiations which led to the Agreement.

You helped to shape the provisions. You helped to ensure that, under the Agreement, countries should not apply their technical regulations and standards to goods in transit. This is crucial for LLDCs. And you also ensured that the Agreement would provide for capacity-building support to help you make the necessary reforms.

This support will be delivered by a range of partners – and we have established the Trade Facilitation Agreement Facility in the WTO to ensure that everyone can access the support they need.

So, I think all of this can be very positive for LLDCs. But, in order to turn the potential benefits into reality, the Agreement must be ratified and implemented.

So far, over 80 members have ratified this deal. The pace of ratifications has been increasing, and I hope to announce further ratifications in the coming days.

However, of the 25 LLDCs which are WTO members, so far nine have ratified the agreement. If all of the remaining LLDCs could submit their ratifications today we would be on the verge of bringing the Agreement into force. So I encourage those of you who haven’t done so yet to complete these procedures as swiftly as possible.

The WTO is here to help. If you need anything – more information or support – just let us know. We stand ready to help wherever we can. Don’t hesitate to reach out.

And, of course, the Trade Facilitation Agreement isn’t the only deal that WTO members have delivered in recent years.

Another major breakthrough came last December, at our ministerial meeting in Nairobi.

On that occasion, members took the historic decision to abolish agricultural export subsidies. This is the biggest reform in agricultural trade rule in the last 20 years.

Of course, there is much more to do in order to reduce distortions in agricultural markets, but this is a major step forward.

In fact, eliminating these subsidies was one element of the UN’s new Sustainable Development Goals – so it is a big achievement that we delivered this, just three months after the goals were adopted in September in New York!

In addition, members agreed to find a permanent solution on Public Stockholding for food security purposes – and to develop a Special Safeguard Mechanism, which would help deal with import surges of food products that can harm domestic production.

In Nairobi, members also took important decisions in favour of LDCs, on Cotton, and a group of members struck a deal to eliminate tariffs on a range of new generation information technology products.

Overall, these are very important outcomes for the global economy – and for the LLDCs.

So we must keep up this momentum, and keep delivering new deals.

It is clear that all WTO members want to deliver on the core Doha negotiating issues. These issues will not go away, should not go away. They include domestic subsidies in agriculture, and improved market access for agricultural produce, industrial goods and services.

However, they do not agree on how to tackle them.

We have tried many approaches over the past couple of years, but with little progress. So we must keep trying – and we must redouble our efforts.

In addition to these issues, some members have been suggesting other issues which they would like to discuss.

These include steps to support micro, small and medium sized-enterprises (or MSMEs), investment facilitation, e-commerce, private standards, trade finance to name just a few.

Members have not yet gone into detail on what they would like to discuss under those broad headings. We need a much greater degree of specificity than we have at present.

However, members are engaged and increasingly active. And this is an opportunity to ensure that the issues that matter most to you are reflected in our negotiating agenda.

So I urge you to get engaged and stay engaged.

An area like e-commerce can be an interesting field for you to explore as LLDCs, as it can help to bridge the distance to international markets. This is particularly true in the services sector, as this form of trade is less susceptible to the constraints of being landlocked.

Trade finance is also something that has been suggested for further discussion and that could have an impact for you.

Companies, especially in LLDCs, face major hurdles in accessing financing on affordable terms. Adequate provision of trade finance could help them join markets and reap more benefits from increased trade.

However, these are just some ideas. It is up to you – the members – to flesh out these conversations, and decide what actions to take.

Nonetheless, it is encouraging that the debate has become much more dynamic. There is a real sense of rising interest and engagement in our work here – sparked by those recent successes which I have described. And a range of other constituencies have sought to make their voices heard in the debate.

In response to requests, we have facilitated meetings with the private sector and the academic community in recent weeks.

A couple of days ago, a group of members held a very well-attended workshop on enhancing the participation of MSMEs in international trade. And a similar event is being planned on e-commerce.

So the conversation is well underway, and it could help to shape our negotiating work for the years to come. It is time for a shift from reflection to action – if we want results in the near future, by our next Ministerial Conference, for example.

It is clear that members want to continue making positive efforts to better integrate developing, least-developed countries and LLDCs into trading flows.

So I think we need to build on these elements of agreement – and learn from what we’ve done well in recent years – to keep on delivering, and make as full a contribution as we can, as quickly as we can.

Working together, we can ensure that LLDCs can benefit more from trade, now and in the years to come.

Thank you.

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Statement by Mr. Joakim Reiter, Deputy Secretary-General of UNCTAD

Good morning,

Many thanks for the invitation to be with you today.

With few exceptions, the world’s landlocked countries are poor.

Of the 15 lowest-ranking countries in the Human Development Index, 8 have no coastline.

In spite of technological progress, landlocked developing countries still face impediments to access world markets.

These impediments are well known to you.

The common wisdom is that geography is destiny. And, indeed, the heavy hand of geography poses challenges. But it’s not deterministic. Switzerland and Austria are two cases in point. Or take Botswana – a striking example of an LLDC that has a record of strong economic performance in recent decades.

In the end, development is entirely possible everywhere. But to develop, to transform the fabric of one’s economy and to modernize, it is critically important to, on the one hand, tackle one’s handicaps and, on the other hand, fully exploit the opportunities for sustained growth. And for all LLDCs, relatively high trade costs are one key handicap.

In fact, LLDCs face much higher trade costs than other developing countries. In parts of Africa, they can be up to 40% higher than the global average.

Add to this the fact that LLDCs are often highly dependent on commodity exports. In fact, primary commodity exports account for more than 50% of total exports in all but 5 of 32 LLDCs. And many of these exports are high-volume and low-value. This magnifies the problem of trade costs.

As a result, high trade costs and low economic diversification trap LLDCs in a vicious cycle. In this cycle, the bulk of FDI flowing into these countries continues to flow to extractive resources. This handicap also directly undermines the full exploitation of the opportunities offered by both trade and investment. It tends to make it harder for LLDCs to diversify and to transform their production and trade patterns, for example by integrating into regional and global value chains.

So, what are the remedies to this? How can we better ensure that trade can be a powerful engine of growth and development for LLDCs?

I would like to highlight three broad areas of priority where UNCTAD also directly supports LLDCs to better harness the potential of trade for the Vienna Programme of Action and for Agenda 2030.

First, LLDCs need to focus on developing infrastructure and transport policy at the regional level.

LLDCs lack access to ports for their goods. This is a serious handicap for any developing country. LLDCs often have treaties with neighboring countries to facilitate legal access to the sea, but the bigger problem is that transit countries have little incentive to invest in infrastructure that would mainly benefit their neighbors.

This problem underscores the need for stronger transport corridors and enhanced connectivity at the national and regional levels. LLDCs will not be able to harness trade without promoting, for instance, regional efforts at harmonizing rail and road networks.

But in the end, money matters. And financing is a major challenge. It’s often difficult to find adequate sources and mechanisms of finance to meet the scale of investment required. This is why we, in UNCTAD, promote public-private partnerships as a vehicle for financing sustainable transport systems in the developing world.

The second area where LLDCs can focus is on integrating into global value chains. For that, LLDCs need more productive investment, including FDI, outside the usual extractive sectors. They need to invest in their services economies, not least infrastructural services and ICT, which function as lubricants for both trade and production. And they need to promote, much more aggressively, connectivity of regional markets through regional integration.

As global economic integration has advanced, production has increasingly dispersed across countries. Some 60% of world trade today consists of trade of intermediate goods and services.

This fragmentation has made it possible for developing countries to capture value along the value chain by specializing in areas of comparative advantage. Accessing and climbing regional and global value chains is an essential means of acquiring capital and know-how.

What else can LLDCs do to facilitate integration into value chains?

LLDCs can help their firms integrate into global value chains by reducing trade costs and administrative burdens. And by improving governance, LLDCs can create more attractive investment climates for foreign firms.

If done right, integration into regional and global value chains can accelerate economic transformation away from dependence on commodities. This can be the first step to a more diversified and resilient economy. Finally, the third area where LLDCs can focus is on trade efficiency in general and trade facilitation in particular. This also includes ratifying the WTO’s Trade Facilitation Agreement.

The TFA would be a clear win for development and for LLDCs in particular. On average, it still takes 47 days to import and 49 days to export - double the time that it takes in transit countries. The average cost of exporting a container from an LLDC is $3,200, whereas for a transit country the average cost is $1,300.

If ratified, the TFA could lead to an average reduction of trade costs of 15%. Among other things, it would ease trade across borders by speeding up customs procedures, improving the transit of goods, and providing technical assistance for implementation.

This would benefit everyone: consumers, companies, governments, and the global trading system that we all depend on.

But for LLDCs to take full advantage of the agreement, they need to carry out needs assessments before implementation. And they need to ensure that special and differential treatment provisions are enforced. In the context of Agenda 2030, financial and technical assistance to LLDCs needs to be the center of development partnerships.

It is clear to all of us that LLDCs can play a leading role in achieving the SDGs. But it is equally clear that they will only be able to do so if they properly harness trade as an engine of inclusive growth. For LLDCs and their development partners, harnessing the potential of trade demands: (1) regional infrastructure, (2) integration into global value chains, and (3) efforts on trade facilitation, including the WTO’s TFA.

Working together in pursuit of these goals, we are convinced that we can make progress in each of these areas.

Thank you for your attention.

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Statement by ITC Executive Director Arancha González

Ladies and Gentlemen

I would like to add my thanks to the UN-OHRLLS and the WTO for this opportunity to exchange views on improving the trade potential of the LLDCs.

I applaud the choice of the theme for today’s discussion: “Harnessing the trade potential of the LLDCs”. It is only by leveraging trade opportunities that we will see transformative change, sustainable and inclusive growth and ultimately, poverty elimination.

With the trade blueprint of the Vienna Programme of Action in one hand and the development compass of the UN Global Goals in the other, we are well positioned to move from pledges to practice. The focus has to be on action and no longer just words.

The International Trade Centre will continue to be your partner in practice. As a development organisation of both the World Trade Organisation and the United Nations we work with your countries and your SMEs to ensure trade potential turns into trade reality on the ground. Trade rules are critical. But their implementation is where the real deliverables for poverty reduction and growth lay.

This brings me to my main message of this morning: if harnessed properly, trade can and has transformed lives. If we are sufficiently strategic, innovative and inclusive – trade will continue to do this in the LLDCs.

For us to be strategic, it is crucial that we make an effort to better understand the real challenges which SMEs in your countries face today. They make up more than 90% of your economic ecosystem and over 70% of jobs especially for women.

SMEs have to be front and centre to your trade policy

Although the conditions to trade in LLDCs may be geographically similar, the main barriers to trade may not necessarily be identical in all 32 of your economies.

From the Non-tariff measures (NTMs) business surveys which ITC has undertaken in LLDCs, we know that “export-related measures” such as export permits and export inspections pose the biggest challenge to exporting companies in Malawi; whereas in Kazakhstan it is “rules of origin and related certificate of origin” that poses the biggest hurdle to exporting companies; and in Rwanda, it is actually “conformity assessment” related to product testing and certification which presents the most significant trade hurdle.

With this type of real-life granular data, we can better steer our interventions and support your companies to overcome the day-to-day challenges they face when trying to trade across borders. Identifying the problem has to be the first step in addressing the solution and creating opportunities.

When it comes to circumventing the physical border constraints that LLDC traders experience, it is imperative that we challenge ourselves to be innovative. E-commerce solutions that connect SMEs to international markets through established virtual marketplaces and payment systems for business-to-consumer or business-to-business transactions should be prioritized through your national policies and regulations.

Following successful interventions in this area, ITC is already working towards a tailor-made e-solutions offer to LLDCs. Later this year, we will launch the Africa Electronic Commerce Cooperative in an effort to bring e-solutions to Ethiopia and Rwanda. Mongolia is also benefiting from our online platforms initiative.

Innovative trade facilitation activities can also play a catalytic role. For example, ITC’s Trade Facilitation interventions in Burundi and Uganda uses a two-pronged approach: encouraging policy reforms to make border procedures simpler and faster, especially for small scale traders; and working to bolster the capacity of women involved in cross-border commerce to understand and comply with regulations. In 2015 alone we helped hundreds of women to transition informal to formalized cross border trading. And underlying this is the WTO Trade Facilitation Agreement where we have worked in over 40 countries- helping many to implement the Agreement, starting with its ratification. With respect to the 9 LLDCs that have ratified the agreement, ITC has worked with UNCTAD to help 6 of these countries to notify their ratification.

These types of innovative approaches must be coupled with more traditional forms of support. For that reason, we will also strengthen our existing interventions supporting Paraguay with regional integration related trade and market intelligence; supporting Tajikistan on post-WTO Accession; working with Central African Republic and Mongolia to build private sector awareness around the WTO Trade Facilitation Agreement; developing agri-processing value chains in Central and West Africa. And the list goes on.

And finally, trade must be inclusive. Although the Vienna Programme does not itself explicitly mention the issue of women’s economic empowerment, it goes without saying that the Programme’s overarching goal of “sustainable and inclusive growth” necessarily includes the empowerment of women and youth. This is also a key area of focus under the 2030 Sustainable Development Agenda.

ITC’s focus on women’s economic empowerment in LLDCs means targeting sectors have high female participation, such as textiles in Burkina Faso and Nepal; horticulture in Lesotho; tourism in Laos; coffee in Rwanda and leather in Zimbabwe.

Last year I made a commitment to invest 70% of ITC resources in LLDCs, LDCs, SIDS, and sub-Saharan African regions; today I can tell you we have surpassed the target and want to do even more.

As was the case under the Almaty Programme of Action, rest assured that ITC remains a committed partner in your efforts to achieve sustainable and inclusive economic growth under the Vienna Programme of Action and your national development plans.

Before I close, allow me to extend a personal invitation to the ITC “e-Commerce Caravan” organized in Geneva and Zurich from 1 July. This ‘caravan of peace’ will bring entrepreneurs from Rwanda, Ethiopia and Senegal amongst others, to showcase merchandise which we have helped to be made available for purchase online. This will be Friday, 1st July at the Place des Nations and July 4 here at WTO. This is an example of trade impact for good and making trade happen on the ground.

Because whether you are landlocked or coastal, trade is your friend.

Thank you for your attention.