Commonwealth Ministers Reference Book

Improving market access for least-developed countries (LDCs) within the Commonwealth

Mike Moore, Director-General, World Trade Organisation (WTO)

The world's poorest countries are not reaping enough benefits from the world trading system. Partly, this is because they often lack basic export infrastructure, such as good ports and roads. That is why the WTO is working together with the World Bank, the IMF, the ITC, UNCTAD and UNDP on an "Integrated Framework" for trade-related technical assistance to the least-developed countries (LDCs). But perhaps more importantly, poor countries are often unable to export freely to richer countries. This needs to change now. Without better access to richer-country markets, the world's poorest have no hope of escaping poverty. Of course, on its own, freer trade is not enough to lift people out of poverty. They also need sound economic policies, debt relief, and help to pay for better education and healthcare. But without trade, and the faster growth it can bring, they will almost certainly remain in poverty.

One of my priorities as director-general of the World Trade Organisation (WTO) is to achieve duty-free and quota-free market access for all exports from LDCs. Yet, contrary to what some of our critics say, the WTO does not lay down the law. It is up to member governments to decide to open their markets to exports from the poorest countries. I urge them to do so. And I also urge the Commonwealth to play its part by taking a stand on this issue, which is consistent with its long-standing support for trade liberalisation and extremely important to many of its members.

Such a move would actually benefit consumers in richer countries. And it need not harm their domestic industries. Exports from LDCs account for a mere 0.5 per cent of world trade. They pose no threat to companies in rich countries. Yet many rich countries persist in offering LDCs free access in areas where they have no comparative advantage and no prospect of acquiring it, such as high-technology products and sophisticated industrial consumer products, but not in areas where they are competitive, such as textiles, footwear, agricultural products and tropical products. LDCs need access to markets where they can compete, not ones where they can't.

Richer countries need to eliminate their tariff as well as their non-tariff barriers. In particular, they need to tackle high peak tariffs and 'tariff escalation,' the pernicious policy of taxing exports of processed goods more heavily which is so damaging to LDCs' prospects for development. Non-tariff barriers include quotas, the protectionist use of rules of origin on products exported from LDCs; unnecessarily restrictive import licensing and authorisation requirements; and unilateral standards and regulations (in particular on health and phyto-sanitary issues) that are more stringent than internationally agreed ones.

I have been consulting with WTO member governments on measures to help LDCs since the WTO's General Council granted me a mandate to do so on February 8th. I have been pressing rich and developing countries alike to offer improved market access to LDCs. Following my consultations, I was able to announce in my report to the General Council on May 3rd that 13 WTO members (12 countries plus the European Union) have taken, or signalled that they intend to take, action to improve access for LDCs to their markets.

The WTO Quad (the United States, European Union, Japan and Canada) have proposed to implement tariff-free and quota-free treatment for <I>essentially all<P> products originating in LDCs. In granting such treatment, they require that it be consistent with their domestic requirements and with their existing international commitments to grant preferential treatment to developing countries, such as the United States's Generalised System of Preferences (GSP) and the European Union's Lomé agreements. As well as the Quad, Chile, the Czech Republic, Hungary, Iceland, Korea, Norway, New Zealand, Slovenia and Switzerland have indicated that they will offer LDCs a better market-access deal. Undeniably, this is progress. But it is too slow, and not enough.

The Commonwealth ought to take the lead in pushing for completely free access to rich country-markets for all LDC exports. For one thing, the 15 Commonwealth countries that are LDCs would benefit directly from an opening of rich-country markets to LDC exports. More broadly, 46 of the 54 Commonwealth countries are WTO members. So the Commonwealth has a huge stake in preserving and strengthening the rules-based multilateral trading system, which has done so much since 1948 to make the world a richer place. Even the eight Commonwealth countries that are not members of the WTO (the Bahamas, Kiribati, Nauru, Samoa, Seychelles, Tonga, Tuvalu and Vanuatu) benefit from the prosperity that freer trade brings the world.

The rich members of the Commonwealth have a duty to help poorer members. Australia, Britain, Canada, New Zealand account for about 11.5 per cent of world trade. Together, they could make a difference. In particular, Canada and Britain should use their influence within the Quad to the full. And fast-growing developing Commonwealth countries, such as India, Pakistan, Singapore and South Africa, which have already made some improved offers to LDCs could also do more.

The Commonwealth as whole ought to come out in favour of the objective of offering duty-free and quota-free market access for all exports from LDCs. Such a common stance would send a powerful message to the international community. This would not be the first time that the Commonwealth had taken a lead on trade issues. Remember that in the Fancourt Declaration the Commonwealth stressed that the multilateral trading system must take account of the interests of all of its members and not just the most powerful. And it also said that the next round of world-trade talks must have a development dimension and that "the Commonwealth can contribute". Now is the time for the Commonwealth to match its fine words with deeds.

The Commonwealth is a force for good in the world. It has provided an intellectual basis for many of the policies that we at the WTO are now following. Its technical assistance here in Geneva is greatly valued. I hope it will join us now in trying to do more to boost the prospects of the world's poorest countries.

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