Changes in global economy and multilateral governance: how can LDCs optimize their participation in the system?

25 June 2013

Globalization, deep integration and so-called “Global Value Chains” (GVCs) offer new opportunities and constitute new threats for LDCs.

 
Summary text prepared by the lead organizer of the session: IDEAS Centre Geneva. The views expressed are those of the author and do not necessarily reflect the views of UNCTAD.

 

 

 

Trade in tasks or GVCs allow LDCs to specialize and become competitive in one specific item, rather than attempt to become competitive for a whole product. On the other hand, LDCs risk to be stuck at the bottom of the value chain by providing only low value-added products like commodities or cheap labour while the value-added part of the chain is reaped by more advanced countries and their consumers. The panel discussed how LDCs can use the GVCs to better integrate into the world economy.

Panellists emphasized the importance for LDCs not only to enter the GVCs but also to climb up the ladder. Services were stressed as an important sector for LDCs to integrate the value chains and thus the global economy. Speakers presented case studies on textile and clothing, horticulture and tourism as well as the example of cotton to illustrate the challenges and opportunities of GVCs for LDCs.

In particular, the panel discussed two types of measures to optimize LDCs participation in the system:

  1. internal measures that the LDCs governments should undertake: enhance opportunities for commodities, boost export diversification, manage natural resources, develop hard and soft infrastructure, remove tariffs on (intermediate) goods, improve business environment, trade facilitation, build capacities to negotiate rules and standards, bolster the services sector, use regional integration as a stepping stone;

  2. the implication for the multilateral trading system and the WTO of the fact that the rules of GVCs, liberalization and trade integration are more and more defined by bilateral and regional agreements, FTA, mega deals and plurilaterals. Panellists questioned the current S&D structure in particular the relevance of exemptions and longer timeframe and discussed how to redefine S&D to defend offensively LDCs interests and needs. Speakers also emphasised the importance of the multilateral trading system for LDCs. The WTO is the only forum where LDCs have a voice. Participants encouraged them to put all their efforts to strengthen the system including by supporting a deal in Bali.

Panel:
  • Ambassador Eloi Laourou, Deputy Permanent Representative of Benin to the UNO and WTO, Coordinator of the LDC Group at UNCTAD
  • Guillermo Valles Galmes, Director for International Trade in Goods and Services and Commodities, UNCTAD
  • Matthew Wilson, Counselor, Office of the Director-General, WTO
  • Isolda Agazzi, Trade Policy Officer, Alliance Sud
  • Nicolas Imboden, Executive director, Ideas Centre

Moderator: Natacha Bogorad, Ideas Centre

 

[A full report of the session will be published in due course.]

Arrow Arrow