WT/COMTD/SE/M/1
Page 1

World Trade
Organization / RESTRICTED
WT/COMTD/SE/M/1
28 June 2002
(02-3617)
Committee on Trade and Development
First Dedicated Session

NOTE ON THE MEETING OF 25 april 2002

Chairman: H.E. Mr. Toufiq Ali (Bangladesh)

Subjects discussed:

A.Adoption of the Draft Agenda......

B.Work Programme on Small Economies – Issues Relating to the Trade of Small Economies - Communication from Barbados, Belize, Bolivia, Cuba, Dominican Republic, El Salvador, Fiji, Guatemala, Haiti, Honduras, Jamaica, Mauritius, Nicaragua, Papua New Guinea, Paraguay, Solomon Islands, Sri Lanka, Trinidad and Tobago (WT/COMTD/SE/W/1) 2

C.Other Business......

A.Adoption of the Draft Agenda

  1. The Chairman reminded delegations of the background to the dedicated session and indicated that the work on small economies was mandated by paragraph 35 of the Doha Ministerial Declaration which stated that:

"We agree to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies. The objective of this work is to frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members. The General Council shall review the work programme and make recommendations for action to the Fifth Session of the Ministerial Conference.".

  1. The General Council had, at its meeting of 1 March 2002, instructed the CTD to have a programme of work on small economies which would be conducted in dedicated sessions. It was also stated that the CTD should report regularly to the General Council on the progress of the work in the dedicated sessions. Elements of the Work Programme on Small Economies could be found in Document WT/L/447.
  1. The draft agenda was contained in Airgram WTO/AIR/1774 of 19 April 2002.
  2. The agenda was adopted.

B.Work Programme on Small Economies – Issues Relating to the Trade of Small Economies - Communication from Barbados, Belize, Bolivia, Cuba, Dominican Republic, El Salvador, Fiji, Guatemala, Haiti, Honduras, Jamaica, Mauritius, Nicaragua, Papua New Guinea, Paraguay, Solomon Islands, Sri Lanka, Trinidad and Tobago (WT/COMTD/SE/W/1)

  1. The Chairman said that Document WT/COMTD/SE/W/1, submitted by the delegations of Barbados, Belize, Bolivia, Cuba, Dominican Republic, El Salvador, Fiji, Guatemala, Haiti, Honduras, Jamaica, Mauritius, Nicaragua, Papua New Guinea, Paraguay, Solomon Islands, Sri Lanka, Trinidad and Tobago, contained issues relating to the trade of small economies.
  2. The representative of Mauritius made a brief presentation of the Document his delegation had tabled together with a number of co-sponsors. He recalled that at the Second Ministerial Conference in Geneva in 1998, the growing marginalization of small economies had been recognized and urgent measures to address them had been called for. Unfortunately, not much had happened at the Seattle Ministerial Conference. However, at the Doha Ministerial Conference in November 2001 Ministers had agreed to the establishment of a Work Programme under the auspices of the General Council, to examine issues related to the trade of small economies and to frame responses to those issues to facilitate the fuller integration of small economies into the multilateral trading system. After the Doha Ministerial Conference, a series of constructive consultations had been held and the proposed Framework and Procedures for the establishment of the work programme had been submitted to the General Council, as a communication from the Chairman, on 1 March 2002. The General Council had taken note of the Framework and Procedures for the conduct of the Work Programme on Small Economies, and the substantive work was now beginning with the first Dedicated Session of the CTD. His delegation hoped for an equally good start to the work in the CTD as had been given in the General Council with the adoption of the Framework and Procedures.
  3. He went on to say that a group of countries had tabled a Document (WT/COMTD/SE/W/1). The list of co-sponsors of that Document was not exhaustive. The nine paragraphs contained in that Document were self-explanatory. The Document identified the trade related issues of vital concerns to the small economies. He would highlight three of the nine paragraphs. First, paragraph 2 made reference to the analysis and research work already carried out by academic institutions and other intergovernmental fora, including the UN, World Bank, UNCTAD, and FAO. His delegation had requested the WTO Secretariat to compile all those Documents as it would constitute a necessary tool for identifying trade remedies that could address the needs of small economies. The WTO Secretariat had responded to the request by providing a list of references to small economies in the discussions in the WTO. His delegation would consider those references and would get back to the WTO Secretariat for more detailed information. He went on to say that paragraph4 of the Document highlighted nine characteristics of small economies which made them particularly vulnerable. For example, subsection (g) of paragraph4 referred to physical isolation and geographical dispersion and remoteness from main markets. In addition to what was written in 4 (g) he said that small islands often suffered from geographical isolation which prevented them from establishing physical infrastructural linkages with other neighbouring countries. They could not build cross border roads as they were islands; neither could they build bridges or canals that would facilitate easy and quick transport of goods and of persons between countries. Because of their isolation, they could not establish cross-border pipelines which would guarantee regular supply of basic consumables such as water, oil and gas as was the case for number of developed countries. They were therefore exposed to shortages and even break-downs in case of unforeseeable event such as cyclones, political conflicts, and embargoes. Paragraph 5 identified a number of implications which were the results of vulnerability, remoteness, and geographical dispersion; implications that had an adverse effect on the trade and development of small economies. He further said that the subsequent paragraphs 6 to 9 indicated the direction in which the proponents of the Document wished to move in terms of preferential trade, foreign investment, the rules of the multilateral trading system and the difficulties that small administrations had to often grapple with. His delegation did not wish to embark on a substantive discussions at the first dedicated session. A broad discussion of characteristics and challenges was rather what he had had in mind. However, the reasons why he still pushed ahead at the first dedicated session was that after the Doha Ministerial Conference, a number of other WTO delegations had approached the small economies asking what a small economy was and how it was defined. That was why the Document had been produced. The second reason why he wished to move the issue forward was that being small and vulnerable, the small economies wished to secure a consensus recognizing the special economic challenges and problems they faced. Even if the Committee did not embark upon any substantive discussion of concrete proposals at its first session on how to address the problems faced by small economies, it did not mean that the delegations concerned had not identified priority areas. Apart from securing greater recognition of their economic realities, another priority area was enhanced representation of small states in global fora. He indicates that they were working towards the formation of a broader global association of small developing states, including those who were not represented in Geneva and that the WTO should facilitate the accession of those countries, in order for them to be physically present in Geneva. That would help consolidate the global association of small developing states. Exchanges of experience should be promoted as the small economies belonged to different geopolitical and geographical groups and regions, as should the development of good practices in regional cooperation among small states. Another area of priority was to analyze the approaches to be taken to mitigate disasters. The small developing countries were often hit by all sorts of natural disasters: cyclones, earthquakes, floods, and rise in sea level. Something therefore had to be done in the area of disaster mitigation. Lastly, the small economies were also considering the provision of differential treatment in the formal preferential access to developed country markets through, for example, tariff preferences or exemptions from stringent WTO rules that the small economies could not fulfill. Technical assistance and capacity building were necessary to enable the small economies to participate more actively in the negotiations. Although the Document submitted focussed on the characteristics and implications that the WTO rules had for the trade and development of small economies, it also gave an indication of the direction in which the authors wished to move the process. He requested the Chairperson to provide an indication of the number of meetings he proposed to hold before the Mexico Ministerial Conference, in order for the group of small economies to provide the Committee with a detailed road map. That road map would be submitted well before the following dedicated session in order to allow for consultations on it, if necessary. It was important that the work moves forward in an orderly fashion, and the Committee should acknowledge the efforts made and provide assistance in this regard.
  4. The representative of Paraguay said that pursuant to the mandate set forth in paragraph 35 of the Doha Ministerial Declaration, the countries that considered themselves to be small economies had submitted the Document containing a proposed work programme, which required the approval of the CTD in order to address the problems that small economies faced in the areas of international trade so that these countries could fully integrate into the multilateral trading system and their vulnerability reduced. As the first stage of analysis, the developing countries sponsoring the submission had tried to define what was meant by a small economy. He said that while there was no clear cut definition of small economies, they could still be identified, as had been done in paragraph4 of the Document. All small economies had something in common, even though there were many differences among them. What they had in common was their vulnerability and their true "smallness" in the economic sense, regardless of their actual size or the size of their populations, and the fact that all of them were truly outside the international trade circuit. While they did not make up a category comparable, for example, to the least-developed countries, they did have problems which made their integration in international trade difficult. He went on to say that he wished to explain why Paraguay qualified as a small economy. The main reason was that Paraguay was a landlocked country, without any access to the sea, with the enormous problems and challenges that this implied. It had therefore found itself at a disadvantage from the very outset in international trade. It was isolated; it depended on transit through third countries; it was burdened with particularly high freight costs to the port of shipment, faced administrative restrictions of all sorts; it depended on the means of transport available in neighbouring countries; problems which at times were aggravated by a deficient road network and transport infrastructure. This situation had been recognized in the Resolution adopted by the United Nations General Assembly - the Millennium Declaration (55/2) - on 18 September 2000, paragraph 18 of which stated that: "We recognize the special needs and problems of the landlocked developing countries, and urge both bilateral and multilateral donors to increase financial and technical assistance to this group of countries to meet their special development needs and to help them overcome the impediments of geography by improving their transit transport systems"; and it had also been recognized in ArticleV of the GATT 1994. For the same reasons, the International Forum on Trade Facilitation, which was to be held in Geneva on 29 and 30 May 2002 under the auspices of the United Nations Economic Commission for Europe, in cooperation with the WTO, UNCTAD, the World Customs Organization, and the International Trade Commission, would be devoting a session to the specific problems of the landlocked countries. His delegation had co-sponsored the submission with the other small economies, since indeed, the implications of Paraguay's landlocked situation and its small economy had been clearly described in paragraph5 of the Work Programme. The geographical factor, the fact of not having any access to the sea, in other words of being isolated on an island surrounded by land, should not by itself be a negative factor and make his country more vulnerable than others to the international markets. Solutions had to be found, and that meant dialogue and a far-reaching analysis. His delegation therefore hoped that the Committee would be moving on to the second stage, including submitting recommendations and conclusions that would contribute to the integration of the small economies in international trade. The objective was to overcome the vulnerability from which small economies currently suffered and help them compete in world trade on an equal footing with the other countries. Ultimately, that should contribute to the development, both economic and social, of the small economies.
  5. The representative of Djibouti said that his delegation recognized the problems that small countries cut off from the rest of the World, faced. The Committee should be sensitive to the problems of those countries and advocate their interest in the General Council so that a decision in their favour could be taken at the next Ministerial Conference.
  6. The representative of Fiji reiterated his delegations' sponsorship of the Document WT/COMTD/SE/W/1 on small economies, and endorsed the issues it contained. The Document, in his view explicitly highlighted the problems that Fiji shared with other small island countries and small economies. His country was a developing country with a narrow economic base. In fact, it depended on a single crop, sugar, to sustain its economy. Furthermore, Fiji was not one island but consisted of 300 small islands, scattered over a large expanse of the Pacific Ocean which exacerbated its problem of vulnerability and isolation. The problems faced by a small island country like Fiji, in sensitizing Members in the WTO to the fundamental problems his Government faced in formulating and administrating trade policy could not be over-emphasized. His Government had difficulty in implementing WTO provisions and in using the WTO to deal with its trade problems. More importantly, the present WTO provisions did not often reflect the specific needs of a small island economy. His Government therefore, once again, underscored the need for timely technical assistance. The Geneva Week had been valuable, but the Geneva Week had also illustrated the need for vulnerable and small economies like Fiji to have a representation in Geneva so that its voice could be heard on issues such as those highlighted in the Document. His delegation looked forward to making further contributions as the work programme on small economies developed.
  7. The representative of Macao, China said that, at the outset, his delegation joined others in welcoming the submission in Document WT/COMTD/SE/W/1 regarding small economies. His delegation supported the efforts made to discuss the issue of small economies in a constructive manner, particularly the constraints they faced in the multilateral trading system. His delegation shared some of the specific concerns and constraints of small economies highlighted in the Document, including on insignificant share of world trade; a limited size of the domestic market; the lack. and often absence, of natural resources; limited amount of manpower; heavy reliance on external trade, particularly on the major trading partners; the concentration of exports in only a few products; and their non-competitiveness in being able to access global market. In Macao, China, which had a population of 430 thousand inhabitants in a small area of 26Sq.km, all the above limitations referred to, existed. The representative of Macao said that he would elaborate more on each. The small internal market could not help the traders of Macao, China to enjoy any benefits which may arise from economies of scale. Further, the absence of natural resources in Macao, China limited efforts to pursue economic diversification policies. While Macao, China had been implementing the WTO Agreement in a faithful manner, the lack of human resources limited its efforts to participate effectively in the multilateral dialogue, especially in view of the heavy agenda of issues being deliberated and negotiated in the WTO. Another concern was the lack of market access opportunities for small economies. The majority of trading firms in Macao, China were small and medium-sized enterprises (SMEs), with limited capital. They were thus, unlike other multinationals, considerably less competitive in obtaining access to the global market.