RESTRICTED
WORLD TRADE WT/COMTD/LLDC/3
16October 1996
ORGANIZATION(96-4290)
Sub-Committee onLeast-Developed Countries
Third Session
NOTE ONMEETING OF13SEPTEMBER1996
Interim Chairman: Mr.Nacer Benjelloun-Touimi (Morocco)
A. Adoption oftheAgenda
1. TheCommittee adopted thefollowing agenda:
A. Adoption oftheAgenda
B. Consideration ofSpecific Measures toAssist andFacilitate theExpansion ofthe
Least-DevelopedCountries'TradeandInvestmentOpportunities,withaviewtoenabling
them toachieve theirDevelopment Objectives
C. Other Business
2. TheChairmanoftheCommitteeonTradeandDevelopment(CTD)informedtheSub-Committee
thathehadnotbeensuccessful inhisconsultations toidentify achairperson fortheSub-Committee,
butthathewaswilling, asrequested byanumber ofdelegations, toassume theposition ofInterim
Chairman untilaChairperson canbeidentified.
3. TheSub-Committee elected Ambassador Benjelloun-Touimi asInterim Chairman ofthe
Sub-Committee.
B. Consideration ofSpecific Measures toAssist andFacilitate theExpansion ofthe
Least-Developed Countries 'Trade andInvestment Opportunities, withaviewtoenabling
them toachieve their Development Objectives
4. TheChairman recalled thatoneofthemandates ofthisSub-Committee wastoconsider specific
measures which would assist andfacilitate theexpansion ofleast-developed countries 'trade and
investment opportunities, withaviewtoenabling them toachieve theirdevelopment objectives. He
noted thatbecause ofstructural impediments andother problems, least-developed countries (LLDCs)
hadnotbeenabletotakeadvantage oftheopportunities provided bytheUruguay Round. Itwasthe
taskofthisSub-Committee anditsparent body, theCommittee onTrade andDevelopment (CTD),
andindeed, theWorld Trade Organization (WTO), toaddress theirproblems andassist intheefforts
toreversetheirmarginalizationfromthemainstreamofeconomicactivity.HereferredtotwoSecretariat
documents, WT/COMTD/LLDC/W/1, entitled "Measures toAssist andFacilitate theExpansion of
Trade andInvestment Opportunities forLeast-Developed Countries" andWT/COMTD/W/15, entitled
"Participation ofDeveloping Countries inWorld Trade", andsaidthattheyhighlighted theproblemsWT/COMTD/LLDC/3
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facing least-developed countries andthechallenges thatlaidahead iftheywere tobesuccessfully
integrated intotheglobal economy. Heindicated thathewould becalling upon therepresentative of
UNCTAD toformally introduce adocument titled "Programme ofAction fortheLeast-Developed
Countries forthe1990s" which wasavailable intheroom. Hepersonally welcomed thesubstantive
contribution ofUNCTAD, andconsidered ittobeyetanother example ofthebroader anddeeper
institutional cooperation which countries were seeking asMembers ofbothinstitutions.
5. Therepresentative ofUNCTAD saidthatthemeeting oftheSub-Committee tookplace atan
opportune time, asitwasonlyafewmonths away from theSingapore Ministerial Meeting andthe
Forty-Third Session oftheTrade andDevelopment Board ofUNCTAD. Hetrusted thattheconclusions
ofthismeeting would serve asaninvaluable input intothose forthcoming meetings. Highlighting the
problems ofLLDCs, hesuggested thata"Priority Need Package" could beimplemented toassist
least-developed countries inovercoming theproblems which barred them from taking advantage of
theopportunitiespresentedbytheresultsofUruguayRound.Suchapackagecouldincludethefollowing
elements: improved market access through mechanisms suchasanimproved GSP; supplementary
financial andtechnical assistance toalleviate supply-side constraints; support fornetfood-importing
countries; improved South-South cooperation; andassisting least-developed countries totakemaximum
advantage ofthespecial anddifferential measures provided forintheUruguay Round Agreements.
Pursuant totherecommendations adopted atUNCTAD IX,efforts were being undertaken tocreate
aspecial Trust Fund forthebenefit ofLLDCs. UNCTAD intended tocontinue strengthening its
collaborationwiththeWTO,ITCandotherrelevantinstitutionswithaviewtofindingcommonsolutions
totheproblems ofleast-developed countries. Theintegrated technical assistance programme forAfrica,
launched byUNCTAD, ITCandtheWTO, wasaproduct ofthisnewly invigorated relationship between
thethree institutions. UNCTAD wasintent onstrengthening itstechnical assistance programme so
astoassist LLDCs withtheimplementation oftheUruguay Round Agreements, andalsotohelpthem
adopt policies andother supportive measures which would strengthen theirexport capabilities andpave
thewayfortheirintegration intotheglobal economy. Given theinterlocking ofinvestment andtrade
processes, UNCTAD intended toassist least-developed countries increating anenabling environment
toattract foreign direct investment. Hementioned thattheSecretary-General ofUNCTAD andthe
Executive Director ofUNIDO would beunveiling aplanaimed atassisting African countries toattract
investment.
6. Therepresentative ofBangladesh congratulated theChairman onhisappointment andpledged
thathisdelegation would work closely withhim. Hesaidthatthewide-ranging problems ofLLDCs
wastheresult ofbothdomestic andexternal factors, suchaseconomic imbalances, unsatisfactory
performanceofproductivesectors,civilstrife,declineintheshareofworldtrade,inadequacyofoverseas
development assistance (ODA), aidconditionalities, decreasing flows offoreign direct investment (FDI),
persistent debtservicing difficulties andrecurrent natural disasters. Theinternational community, as
demonstrated intheMarrakesh Declaration (1994) andthereport oftheMid-Term Review ofthe
Implementation oftheProgramme ofAction forLLDCs (1995), hadunderlined theneedfortheadoption
ofmeasures which would assist LLDCs intheircommitment toreverse theirmarginalization from
themainstreamofeconomicactivity.TheMidrandDeclarationissuedattheconclusionofUNCTADIX
on11May1996highlighted theincreasing marginalization ofLLDCs, characterized asdirepoverty,
described itasanintolerable situation andcalled forspecial attention toLLDCs. Inthisspirit,
UNCTAD IXexamined theimplications oftheprocess ofglobalization andliberalization onLLDCs
andsuggested asetofnational policies andinternational support measures withaviewtoenhancing
theircapacity tomeetthechallenges arising outofthisprocess. Notwithstanding, thegoodwill which
donor countries andtheinternational community showed forLLDCs, theyremained economically
vulnerableandwereconfrontedwiththedangeroffurthermarginalization.Thisfacthadbeenadequately
reflected inthe1996 Least-Developed Countries Report published bytheUNCTAD Secretariat. It
wasnecessary totranslate words intodeeds andtotransform commitments, decisions andresolutionsWT/COMTD/LLDC/3
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intoconcrete actions. Thisprocess called forcareful consideration ofspecific measures tofacilitate
theexpansion oftrade andinvestment opportunities forLLDCs withaviewtoassisting them inthe
attainment oftheirdevelopment objectives. Thefollowing international support measures could be
adopted bytheinternational community tocomplement thefar-reaching reforms thathadbeencarried
outbyLLDCs: (i)acommitment bydonor countries tomeettheiraidtargets, especially when the
number ofLLDCs hadincreased from31to48inthelastoneandhalfdecades; (ii)theadoption of
measures which would encourage investment flows toLLDCs, whoatpresent received lessthan1%
ofglobal investment flows; (iii)theadoption ofacompensation package forLLDCs, tocompensate
theerosion oftheirpreference margins bytheWTO Agreement; (iv)acommitment from Members
oftheWTO toimplement alldecisions andmeasures adopted infavour ofLLDCs during theUruguay
Round; and(v)theprovision ofadequate technical assistance toLLDCs toenable themtostrengthen
theirinstitutional andhuman capacities. Heexpected theMinisterial Conference inSingapore totake
stock oftheprevailing situation inLLDCs andprovide guidance onhowtheirproblems could be
addressed withaviewtoincreasing theirparticipation inthemultilateral trading system andtheglobal
economy.
7. Therepresentative ofSingapore thanked theSecretariat forthebackground documentation and
welcomed theactive participation ofUNCTAD atthismeeting, asthisdispelled anynotion ofrivalry
between thetwoinstitutions. Hereferred todocument WT/COMTD/W/15, which identified some
oftheproblems confronting LLDCs andwaysofresolving them. Thestatement fromtherepresentative
ofBangladesh wasimportant, asitsuggested theadoption ofcertain measures which would facilitate
theintegration ofLLDCs intothemultilateral trading system. Thisdemand-driven approach should
beencouraged,sincetheLLDCsthemselvesknewbestwhatwasneeded.ThecontributionofBangladesh
andother delegations hadenabled theSub-Committee toformulate specific proposals forMinisters
atSingapore. While some oftheproposals wereimmediately achievable, others could onlybeachieved
inthelongterm. Based upon theoutcome oftheSingapore Ministerial, aWork Programme could
beadopted toguide theSub-Committee initswork.
8. TheChairman thanked Singapore fortheveryconstructive proposal andsaidthathehadbeen
carrying outconsultations onaPlanofAction forleast-developed countries andhoped tomake adraft
oftheplanavailable forconsideration bydelegations inthenottoodistant future.
9. Therepresentative ofZambia alluded totheproblems facing least-developed countries and
saidthatunless urgent action wastaken, theplight ofLLDCs would continue todeteriorate. The
documents prepared bytheSecretariat wereuseful astheyhighlighted some ofthepressing problems
facing LLDCs, andconfirmed theirmarginalization inthemultilateral trading system. Theadoption
ofstructural adjustment programmes hadnotresulted inanysignificant improvement intheeconomic
position ofLLDCs. Itwastherefore important thatMinisters atSingapore adopt measures which would
effectively assist LLDCs intheirefforts tointegrate themselves intothemultilateral trading system
andtheworld economy. Heexpressed surprise atthelukewarm reactions ofthemajor trading partners
totheproposals made bytheDirector-General oftheWTO attherecent G7summit atLyon. The
share ofLLDCs inworld trade waslessthan0.4percenttotalling notmore thanUS$16billion.
Innoproduct category didtheirshare exceed 4percent. These figures underscored theneedfor
Ministers inSingapore toadopt measures which would produce results. LLDCs needed measures which
would channel foreign direct investment totheir territories andincrease their participation inthe
multilateral trading system. Ministers ought torenew theircommitment toimplement allthemeasures
which were adopted infavour ofLLDCs including theDecision onMeasures inFavour ofLeast-
developed Countries andtheDecision onMeasures Concerning thePossible Negative Effects ofthe
ReformProgrammeonLeast-developedCountriesandNet-foodImportingCountries.TheWTOneeded
tostrengthen itstechnical assistance programme sothatLLDCs could derive maximum benefit from
themultilateral trading system. Technical cooperation should focus oninstitutional andhuman capacityWT/COMTD/LLDC/3
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building. LLDCs were determined tocontinue theirreform programmes, butthesuccess ofthose
programmes depended onopenexport markets andanabsence ofprotectionist policies intheirtrading
partners.
10. Therepresentative oftheEuropean Communities saidthatthestatement bytherepresentative
ofBangladesh wasofgreatinterest, inthatitsuggested waystoreverse themarginalization ofLLDCs.
Theplight ofLLDCs wasasource ofconcern notonlytotheEuropean Communities, buttotheentire
international community. Anumber offactors were responsible forthedeplorable socio-economic
conditions inLLDCs. Whereas external factors played apart,domestic reasons were largely tobe
blamed forthedeteriorating conditions inLLDCs. Theability oftheinternational community tochange
thedomestic conditions wasverylimited. LLDCs themselves hadaresponsibility toadopt policies
which would strengthen thedomestic framework. Hewelcomed theproposal bythedelegation of
Singapore toaddress specific recommendations toMinisters attheSingapore Ministerial meeting.
TheProgramme ofAction should notonlyconcentrate onfuture action, butshould alsoreview the
measures which hadsofarbeenimplemented infavour ofLLDCs bytheinternational community.
Shewasnotclearabout thesuggestion made byrepresentative ofBangladesh toadopt aflexible approach
inapplying theWTO rules infavour ofLLDCs. Thisdidnotseem anissue, asshewasnotaware
ofanycomplaint tothateffect.
11. TherepresentativeofTanzaniaassociatedhimselfwiththecommentsmadebytherepresentatives
ofBangladesh, Singapore andZambia. Hisdelegation wasalsograteful totheChairman forthework
hewasdoing bothintheCTD andtheSub-Committee. Hewasparticularly attracted totheproposal
made bySingapore thataPlanofAction should beimplemented forLLDCs. Herecalled that,atthe
meeting oftheCTD thedaybefore, hisdelegation hadenquired whether commitments embodied in
thepreambles toseveral WTO Agreements andDecisions wereenforceable. Hisdelegation waslooking
forward totheoutcome oftheChairman 'sconsultations onthePlanofAction forLLDCs. Heagreed
withthedelegation ofZambia thattechnical cooperation should gobeyond seminars andassistance
toLLDCs tohelpthemcomply withtheirWTO obligations. Itshould alsofocus onassisting LLDCs
inbuildingupandstrengtheningtheirinstitutionalandhumancapacities,toenablethemtotakeadvantage
oftheopportunities offered bytheUruguay Round. Inthiscontext, hewaslooking forward tothe
results oftheChairman 'sconsultations.
12. TheChairman thanked therepresentative ofTanzania fortheuseful contribution andclarified
thattheWTO PlanofAction would becomprehensive inthesense thatitwould alsocover technical
assistance. Heagreed thattechnical assistance should alsofocus oninstitutional andhuman capacity
building, andthatthere should becooperation between organizations providing technical assistance.
13. Therepresentative ofNorway saidthatitwasclear thatthemarginalization ofLLDCs was
caused byaninteraction ofcertain factors, bothdomestic andexternal, aswasstressed bythe
representative oftheEuropean Communities. Theproposal bytherepresentative ofSingapore to
implement aPlanofAction forLLDCs boreinterest andappealed tohisdelegation. Hecautioned,
however, thatthePlanshould onlycover matters within theremit oftheWTO.
14. Therepresentative ofSingapore saidthathesupported theviews ofthedelegations ofTanzania
andNorway. TheWTO wasatrade organization, notanaidagency. Theaimoftheinternational
community tointegrate LLDCs intothemultilateral trading system wasmotivated bytherecognition
thataneffective participation byallcountries would strengthen it.Their integration would result in
increased opportunities forother countries, since theywould beabletoexport more totheLLDCs.
Heagreed withtherepresentative ofTanzania thatanewapproach wasneeded towards technical
assistance. Thevalue ofseminars andlectures toassist LLDCs inincreasing their exports and
participation intheinternational trading system waslimited. Hesuggested thattheWTO should workWT/COMTD/LLDC/3
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closely together withthose OECD andASEAN countries which hadtheirowntechnical cooperation
programmes andwereextending assistance toLLDCs. Hesuggested thattheSub-Committee request
theSecretariat tocompile alistoftheprogrammes offered byeachcountry, withaviewtoenabling
LLDCs tochoose theprogrammes would beofmost benefit tothem.
15. Therepresentative ofZambia, recalling thediscussion intheCommittee onTrade and
Development theprevious day,drew some parallels between theexperiences ofAsian andAfrican
countries. Whereas market access wasperhaps aproblem forAsian countries, supply-side constraints
constituted themain obstacle facing African countries. Iftheproposed PlanofAction wastohave
anyrelevance forLLDCs andAfrican countries, aserious attempt hadtobemade toincrease investment
flows tothese countries. Trade andinvestment were twosides ofthesame coin. While technical
assistance wasuseful, itsability tofacilitate theintegration ofLLDCs andAfrican countries intothe
multilateral trading system haditslimits. WTO needed tostepupitscooperation withtheBretton
Woods institutions, sinceonlyanintegrated approach could provide solutions tothenumerous problems
oftheLLDCs. Hedisagreed withcomments totheeffect thattheWTO should onlyconcentrate on
trade-related matters.
16. TheChairman thanked Zambia foritsthoughtful remark, andsaidthattechnical cooperation
wasimportant fortheintegration ofLLDCs intomultilateral trading system. Coordination between
theWTO andother institutions which provided technical assistance suchasUNCTAD, ITC,theWorld
Bank andtheIMFneeded tobestrengthened. Anintegrated technical assistance programme, which
wasplanned andexecuted inacoherent manner, would deliver themost useful results forLLDCs.
Thenextmeetings oftheCTD andtheSub-Committee, which would beaddressed bytheChairman
oftheJoint Development Committee oftheWorld Bank andtheIMF, should beseeninthisspirit
ofcoherence.
17. Therepresentative ofBangladesh referred tothethought-provoking statements made bythe
representativesofTanzania,ZambiaandSingapore.ThestatisticsquotedbytherepresentativeofZambia
highlighted themagnitude oftheproblems facing LLDCs. Theproposal made bytherepresentative
ofSingapore tosetupaWork Programme aftertheSingapore Ministerial Conference wasinteresting
andheurged delegations toreflect onthissuggestion withaviewtoformulating concrete suggestions
which would assist Ministers inadopting theappropriate policy responses. Given thecomplexity of
theproblems facing LLDCs, itwasproper tosetshort, medium andlong-term goals. Hestressed
theimportance oftechnical assistance, andsaidthatithadaroletoplayinfacilitating theintegration
ofLLDCs intothemultilateral trading system. Inresponse tothequestion raised bythedelegation
oftheEuropean Communities heclarified thathehadreferred toprovisions which didnotprima facie
appear toimpose positive obligations onMembers.
18. Therepresentative ofJapan agreed withtherepresentative ofZambia thattheproblem ofmost
LLDCs wasoneofsupply-side constraints, rather thanofmarket access. Inorder toincrease their
participation inthemultilateral trading system, LLDCs needed toproduce commodities orproducts
which mettheexpectations ofconsumers inimporting countries. They alsoneeded tohaveasolid
infrastructural baseincluding anextensive transportation network, packaging industries, andadequate
tradefinancingsystemssuchastradeinsuranceindustriesandrelatedessentialindustries.Inthatcontext,
technical assistance hadaroletoplaytobuild thecapacities ofboththeprivate andpublic sectors in
LLDCs. Henoted thathiscountry offered suchassistance through bilateral andmultilateral channels.
LLDCs would beabletoattract more investment, iftheycreated therightmacro-economic framework
andhadaskilled andhighly trained labour force. Theimplementation ofstructural adjustment programs
could assist LLDCs inthatregard.WT/COMTD/LLDC/3
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19. Therepresentative ofZambia stressed thelimits oftechnical assistance interms offacilitating
theintegration ofLLDCs intothemultilateral trading system andtheglobal economy. Whereas LLDCs
welcomed thepriority attached toinstitutional andhuman capacity building, itwasnotapanacea for
alltheproblems confronting LLDCs. Hereiterated thatonlyanintegrated approach involving the
Bretton Woods institutions could effectively dealwiththeproblems ofLLDCs.
20. Therepresentative ofNepal saidthathisdelegation fullysupported thestatement made bythe
representative ofBangladesh including thespecific proposals toimprove thesocio-economic conditions
inLLDCs. Heagreed alsowiththeproposal made bytherepresentative ofSingapore, andrequested
thathisdelegation beinvolved intheconsultations bytheChairman. Theprocess ofglobalization
wasatwo-edged sword; ontheonehand, ithadcreated anumber ofopportunities which, ifexploited,
could transform theeconomies ofLLDCs. Ontheother hand, LLDCs risked being marginalized from
themainstream ofeconomic activity duetothestructural problems facing them. Technical assistance
hadaroletoplay, ifLLDCs weretobenefit fromtheprocess ofglobalization anditshould befocused
oninstitutional andhuman capacity building. Inthiscontext henoted thattechnical assistance needed
tobeprovided bytheWTO tocountries suchasNepal which wereintheprocess ofacceding tothe
WTO. Thesituation ofthose LLDCs which didnothaveanyadequate representation inGeneva had
tobetaken intoaccount interms oftheworkload.
21. Therepresentative ofSingapore saidthatheshared theviews made bytherepresentative of
Zambia oninvestment. Thelinkbetween trade andinvestment could notbesevered: investment
facilitated tradeandtradeinturntriggered thetransfer oftechnology torecipient countries. Heagreed
withtherepresentative ofJapan thatthemacroeconomic framework ofacountry hadtobeinproper
order, ifitwere toattract investment. Askilled andhighly qualified andmobile workforce wasa
necessary condition toattract foreign investors. Heacknowledged theroleofthetechnical assistance
providedbythegovernmentsofJapan,Canada,UnitedStates,UnitedKingdom,Germany,theEuropean
Communities andother countries inassisting Singapore inachieving economic development. Hegave
examples ofsuchassistance andsaidthatSingapore andother ASEAN countries werenowprepared
toshare theirexperiences withLLDCs andother developing countries.
22. TheChairman saidefforts would bemade todraftacomprehensive butrealistic PlanofAction
forLLDCs inthenearfuture andassured delegations thattheircontribution would betaken intoaccount
inthePlan.
23. Therepresentative ofIndia associated himself withthecomments made bytherepresentatives
ofBangladesh andZambia, andexpressed hisdelegation 'ssupport forthePlanofAction suggested
bytherepresentative ofSingapore. Hesuggested that,indrawing upthePlanofAction, consideration
should begiven tostudies carried outbyother organizations andtosome ofthepoints made indocument
WT/COMTD/W/15. Itwasclearfrom thestudy contained inthatdocument, thattheLLDCs 'debt
burden impeded their economic development. Instead ofusing their export earnings toinvest in
productive ventures, asizeable proportion oftheirearnings were usedtoservice theirdebts. The
possibility ofdebtrelief should belooked into.
24. TheSub-Committee tooknoteofthestatements made.WT/COMTD/LLDC/3
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C. Other Business
25. TheChairman saidthatthenextmeeting oftheSub-Committee would takeplace on
23September, following theTenth Session oftheCTD onthatsame date. Withaviewtoincreasing
theparticipation ofLLDCs inthatmeeting, travel andrelated expenses ofrepresentatives ofLLDCs
whowere based inEurope, butoutside ofGeneva, hadbeenfinanced through theNorwegian Trust
Fund. Henoted thatthemeeting would beaddressed byHisExcellency Mr.Mohammed ElKabbaj,
Chairman oftheJoint IMF/World Bank Development Committee.
26. TheSub-Committee tooknoteofthestatements made.