Landlocked Developing Countries (LLDCs) face high trade costs due to their isolation from the world’s largest markets, according to a new report by World Trade Organisation (WTO) launched yesterday.
The report recommends ways to address these trade challenges so that LLDCs can increase their participation in international trade and accelerate their recovery from the COVID-19 pandemic.
The report, “Easing Trade Bottlenecks in Landlocked Developing Countries”, delves into the specific challenges that LLDCs face when trading internationally, including supply chain constraints, reliance on transit countries for imports and exports and the repercussions of the COVID-19 pandemic on LLDCs’ economies.
The study finds that LLDCs’ trade costs are 1.4 times higher than those of developing countries with a coastline. It also details LLDCs’ vulnerability to climate change but notes the benefits that trade-in services and e-commerce can bring to these countries.
In her opening remarks, Director-General Ngozi Okonjo-Iweala reiterated her commitment to promoting a more inclusive multilateral trading system: “LLDCs face particularly acute versions of realities that all members must grapple with, as complex emerging challenges, such as climate change, threaten development possibilities and future prosperity. We must leverage the potential of trade to meet these challenges. We must also ensure that the gains from trade are equally distributed. Enhancing integration into regional and global value chains of women, youth and small businesses creates jobs and opportunities, and helps reduce inequality. In a world marked by the COVID pandemic, the paths that lead to economic growth cannot be separated from those that lead to inclusion.”
LLDCs’ already fragile trade and economic situation was further exacerbated by measures taken by governments to combat the COVID-19 pandemic. The study notes a 40 percent decline in LLDCs’ exports between April 2019 and April 2020.
The study stresses that implementing the Trade Facilitation Agreement is critical for easing the flow of goods across borders. It also underlines the importance of improving transport connectivity, putting digital technology at the forefront of policy objectives, reducing trade costs through customs digitalization, and adapting rules of origin and sanitary and phyto-sanitary measures to LLDCs’ special needs. These measures can help ease LLDCs’ trade-related logjams and enhance their participation in the multilateral trading system. They will also help to promote LLDCs’ economic recovery and boost their resilience to crises.
DG Okonjo-Iweala further stressed the need for establishing “partnerships between LLDCs and transit countries” – including on the interoperability of customs systems, logistics and other transport services – to help LLDCs effectively connect to global markets.