Statement by Mr. Petko Draganov, Deputy Secretary-General of UNCTAD
Fourth Meeting of Trade Ministers of Landlocked Developing Countries
12 Sep 2012
Honourable Ministers and senior trade officials,
Distinguished representatives of international and regional organizations,
Ladies and gentlemen,
On behalf of the Secretary-General of UNCTAD, allow me to express my gratitude to the Minister of Economic Development and Trade, His Excellency Mr. Bakytzhan Sagintayev, for the kind invitation to address the Fourth Ministerial Meeting of Landlocked Developing Countries.
Today's meeting brings us back to the city which gave its name to the first UN-wide programme of action for landlocked developing countries almost ten years ago. The Almaty Programme of Action proved to be a milestone for mobilizing global support for these countries. Based on the notion of strong partnerships between LLDCs and transit countries, as well as with their development partners, the Almaty Programme of Action highlights the causal link between efficient cross-border transport, beneficial participation in international trade, and high and sustainable rates of economic growth.
Allow me, therefore, to briefly share with you UNCTAD's reflections on the progress that the LLDCs have made in the international trading system since the Almaty Programme of Action was adopted nearly ten years ago and the way forward from here.
The landlocked developing countries as a group have recorded an impressive trade performance in the recent past. Total exports increased almost fivefold between 2000 and 2010. Against the background of the unfavorable external environment of the financial crisis and the economic downturn in major developed economies, the LLDCs' merchandise exports grew by more than 20 per cent annually during the period 2000-2010. This is indeed a remarkable achievement.
However, despite these high growth rates, the share of the Group of LLDCs in global trade is still modest and amounted to only 1.04 per cent in 2010. In fact, it has been receding since 2008, when it reached its highest level so far with 1.21 per cent. Total merchandise exports of all 31 LLDCs together account for just about ten percent of China's exports.
Moreover, the LLDCs' exports are concentrated in a few countries and in a few products. Only Azerbaijan, Botswana, Kazakhstan, Paraguay, Turkmenistan, and Uzbekistan had merchandise exports in excess of US$ 4 billion in 2010, meaning that these six countries accounted for 70 per cent of the total LLDC merchandise exports.
In terms of products, the external trade of LLDCs is highly concentrated in a few products, mainly primary commodities. Energy commodities, such as crude oil and natural gas, represent the single most important category of LLDCs' merchandise exports, accounting for almost 60 per cent of the total. Minerals and metals, including aluminum, copper ore, nickel and zinc, are the second largest export category of LLDCs.
This economic specialization in transport-intensive raw materials is paradoxical given the transport constraints faced by these countries. Conversely, exports that are less sensitive to constraints related to transport and distance play only a marginal role in LLDCs. For example, the trade in services other than tourism, which is of economic importance in several LLDCs (Bhutan, Botswana, Nepal, Uganda), is still very limited in LLDCs and its export value is low.
This broad picture of the value and composition of the external trade of the LLDCs underlines the need for continued international assistance to these countries to advance structural transformation and economic re-specialization.
The preparatory process for the Comprehensive Ten-Year Review Conference of the Almaty Programme of Action provides an ideal opportunity to reflect on the past and to develop a bold vision for the future.
Although this stock taking process is still at the very beginning, it is not premature to state that the Almaty Programme of Action has made an impact in several areas.
Firstly, the awareness of the specific challenges faced by LLDCs has increased globally. Today, the problems of landlocked developing countries are prominent in the international development debates and in pertinent forums, ranging from the Millennium Development Goals to the multi-lateral trade negotiations in the WTO to the Doha Declaration adopted at the recently held UNCTAD XIII Conference.
Secondly, concrete areas of success in the implementation of the Almaty PoA can be found in the transit transport operations of LLDCs. Examples of major projects that will strengthen the transit transport connectivity of LLDCs and facilitate external trade operations can be found in all developing regions. Thus, in Latin America, the construction of a highway linking Bolivia with ports in Brazil and Chile has recently been announced. The port of Montevideo, serving also Paraguay, is enlarging its turnover capacity to reduce congestion. In West Africa, the AfricaRail project aims to rehabilitate and construct 2,000 km of railway, linking LLDCs such as Burkina Faso and Niger with coastal countries in the region. In East Africa, the capacity of the port of Dar es Salaam, which also serves the landlocked developing countries Burundi, Malawi, Rwanda, Uganda and Zambia, is being doubled. In Asia, through the Economic Cooperation Organization (ECO), an extensive programme has been launched to provide landlocked countries in the region with better access to ports in Iran, Pakistan and Turkey. On a larger scale, the Asian Highway Agreement, adopted in 2005, has been signed by 29 countries. Its network of more than 141,000 kilometers of standardized roads provides land transport connectivity within the region and linkages with Europe.
Moreover, LLDCs benefit increasingly from recently concluded regional trade agreements. In addition to transit-related terms on the provision of transport infrastructure and logistics, many of these agreements also contain measures for increased administrative transparency measures and for the simplification and harmonization of trade documents, as well as better coordination among border agencies.
As a result of these and other infrastructure developments and trade facilitation measures, transport time could be shortened and certainty in trans-border trade could be enhanced. In short, transaction costs in international trade could be lowered for a number of landlocked developing countries.
Geography may pose severe constraints on economic growth and development, but it need not determine a country's destiny.
For landlocked developing countries, the promotion of efficient transport systems is an important objective. But these efforts must not stop at their countries' borders. Many investments in transport and trade facilitation infrastructure need to be cross-border in nature or have to be realized altogether in transit countries. Such projects may pose additional coordination problems and political challenges. Hence, close cooperation between LLDCs and their transit countries is a sine qua non for improved cross-border transport connectivity of LLDCs.
The Almaty Programme of Action rightly puts great emphasis on transit policy issues, trade facilitation and infrastructure development. UNCTAD would like to see these issues prominently placed in a successor document to the Almaty PoA.
However, the development of adequate transport infrastructure and efficient transit systems is not sufficient to strengthen the positions of LLDCs in international trade. Empirical evidence from other landlocked countries, for example in Europe, demonstrates that it is possible to grow from being land-locked into being land-linked and to adjust one's external trade portfolio accordingly. Key ingredients of such development policies appear to be strong regional cooperation and integration and an economic specialization that takes into account constraints related to the specific geographical location of these countries.
These policies need to go hand in hand with efforts to attract FDI to economic sectors that produce goods and services that are less sensitive to distance or transport costs. LLDCs should promote the production of high-value but low-bulk goods, such as high-precision instruments, IT components and pharmaceuticals, as well as services in areas such as tourism, education and information and communication technologies. In export agriculture, LLDCs should target high-end crops, such as cut flowers, off-season fruits and vegetables or organic products that lend themselves to expeditious and cost-efficient air transport, while fetching premium prices.
As you are well aware, UNCTAD has been associated with the issue of landlocked developing countries since its inception in 1964, when the particular needs and problems of these countries appeared on the agenda of our first conference. Our long-standing involvement with these countries has helped us to understand their needs and problems primarily as development challenges, which call for more than just technical and infrastructural remedies.
In this regard, we see a number of emerging challenges and opportunities for LLDCs that deserve attention in the development efforts of LLDCs. These issues include South-South and triangular cooperation; attracting development-supportive FDI inflows; building productive capacities for economic diversification, restructuring and specialization; promoting "green" economic activities and the use of clean technologies; mitigating the various consequences of climate change; growing emigration pressure/ brain drain; facilitating the WTO accession of LLDCs; mobilizing support for the legitimate objectives of LLDCs in the multilateral trade negotiations, and ensuring more benefits for LLDCs from the Aid for Trade initiative, to list but a few.
Therefore, I would like to invite the governments of LLDCs to pay due attention to the development dimension when designing a successor programme of action.
Let me assure you, Mr. Chairman, that UNCTAD stands ready to continue its assistance to the Group of LLDCs for the achievement of their development objectives. In this sense, I wish you every success for this meeting.
Thank you very much.