Members Note Sharp Downturn in LDCs’ Trade, Discuss Role of Trade in Eradicating Poverty

An analysis of least-developed countries’ (LDCs) trade flows in 2020, presented to WTO members at a meeting of the Sub-Committee on LDCs on 19 April, revealed that the negative impact of the COVID-19 pandemic on trade was worse for LDCs than for the world as a whole. In addition, delegations discussed preparations for the Fifth United Nations Conference on LDCs as well as the latest research on LDCs carried out by the United Nations Conference on Trade and Development (UNCTAD).

LDCs' economies have been hit hard by the COVID-19 crisis, according to a presentation by the WTO Secretariat, which highlighted a 10.3 per cent decline in exports of merchandise trade in 2020 compared to 2019 and a 10.5 per cent decline in imports. This is sharper than the global 7.7 per cent decline in exports and 7.8 per cent decline in imports over the same period. Due to their dependence on travel exports, LDC exports of services are estimated to have dropped around 40 per cent in the first three quarters of 2020, double the decline experienced by the rest of the world (19 per cent).

The ongoing crisis has revealed the importance of building LDCs' trade infrastructure and strengthening their capacities to keep the pandemic in check and better integrate into the world economy, Chad said, on behalf of the LDC Group. Supporting micro, small and medium-sized enterprises and creating jobs will be essential to support economic recovery.

Fekitamoeloa Katoa Utoikamanu, United Nations Under-Secretary-General and High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States (UN-OHRLLS), updated members on preparations for the Fifth United Nations Conference on LDCs (also known as "LDC5"), due to take place in Doha, Qatar, in January 2022. The LDC5 Conference is expected to adopt a new global Programme of Action for LDCs, following on from the Istanbul Programme of Action for LDCs (IPoA), which ended in 2020.

Ms Utoikamanu said that international trade is expected to remain central in the next Programme of Action for LDCs, alongside other issues such as the need to improve access to sustainable energy, finance, employment and achieving food security. Lifting LDCs out of poverty and attaining the United Nations (UN) Sustainable Development Goals also features prominently on the agenda. In addition, the international community is looking to accelerate the graduation of countries from LDC status in a sustainable manner.

A recent report by the UN Secretary-General on implementing the IPoA over the past decade underlined the importance of structural transformation in LDCs and building resilience to future shocks to build back better from the COVID-19 crisis. It also points to the need to harness the potential of new technologies, improve governance and build robust institutions in the world's poorest economies.

"The LDC5 Conference will be a vital occasion to renew support and cooperation for the most vulnerable countries of the international community," the chair of the Sub-Committee, Ambassador Monique Van Daalen of the Netherlands, said. She also noted that "progress at the WTO, in particular on issues of interest to the LDCs, is important to strengthen the role of trade as a key enabler of inclusive economic growth in the LDCs."

There are currently 46 least-developed countries on the UN list, 35 of which are WTO members.

Chad, on behalf of the LDC Group, called on the international community to seek an ambitious new programme of action, fine-tuned to the needs of LDCs. WTO members emphasized the role of trade in helping LDCs meet their development objectives. Inclusive trade will be critical to LDCs' socio-economic development, they stressed. The commitment to help LDCs use trade to recover from the crisis was widely expressed.

Several delegations emphasized the need to enhance LDCs' productive capacity and export competitiveness. They called for additional and robust trade-related support measures from country donors and international organizations, such as duty-free quota-free market access, technology transfer and preferential rules of origin. Extending the availability of such measures after LDCs graduate would help them sustain their export performance, they said.

Introduced by UNCTAD, "The least-developed countries report 2020 – productive capacities for the new decade" notes that LDCs were innovative in setting up measures to combat the crisis, both productive and institutional. For example, Senegal came up with rapid COVID-19 testing facilities and Bangladesh revamped its manufacturing production capacity.

Yet, it is estimated that over 300 million people are still living in extreme poverty, according to UNCTAD. The organization's new productive capacities index indicates that LDCs lag behind other developing countries in several productive capacity areas. The transition to a digital economy remains pending. This is due to costly adoption of new technological capabilities, to insufficient skills and inadequate infrastructure. Policies are needed to develop LDCs' productive capacities through investment and industrial transition.

A representative from the United Nations Industrial Development Organization said that several recent international online gatherings highlighted the importance of building a resilient manufacturing sector in LDCs to ensure structural economic transformation. This includes the African Regional Review meeting in February, which reviewed the implementation of the Istanbul Programme of Action in Africa, the 53rd session of the United Nations Economic Commission for Africa in March, and the WTO-led Aid for Trade Stocktaking Event held from 23 to 25 March.