RESTRICTED  
  
WT/COMTD/SE/M/31  
 
27 May 2016  
(16-2871)  Page: 1/17  
Committee on Trade and Development 
Thirty-First Dedicated Session    
 
   
NOTE ON THE MEETING OF 9 MARCH 2016 
Chairperson: H.E. Mr. Juan Esteban Aguirre Martínez (Paraguay) 
 
A. ADOPTION OF TH E AGENDA .................................................................................... 1  
B. "CHALLENGES AND OPPORTUNITIES EXPERIENCED BY SMALL ECONOMIES 
WHEN LINKING INTO GLOBAL VALUE CHAINS IN TRADE IN GOODS AND 
SERVICES" (WT/COMT D/SE/W/31) ................................................................................ 1  
(i) Value Chains in the Textiles and Apparel Sector (Section 3.1.3) – Introduction by 
WTO Secretariat  ............................................................................................................... 2  
(ii) Economic Upgrading in Textiles and Appare l Value Chains: Possibilities of Accessing 
Niche Markets – Example Mauritius – (Presentation by Video Conference – IDE-JETRO 
Japan) ............................................................................................................................. 3  
(iii) Trade in Textiles, Statistics for Countries and Regions and Structure of Global Value 
Chains in Textiles and Clothing Trade – (Representative of Guatemala)  ..................................... 4  
(iv) Benefits of Regional Integration for Small Economies in the Textile and Apparel 
Sector – (Presentation by the ITC)  ...................................................................................... 6  
(v) National Case Stories  ................................................................................................ 9  
C. MINISTERIAL DECISION ON THE WORK PROGRAMME ON SMALL 
ECONOMIES (WT/MIN(15)/ 40 – WT/L/975) – REDUCI NG TRADE COSTS ..................... 14  
D. OTHER BUSINESS .................................................................................................. 17  
 
 A. ADOPTION OF THE AGENDA 
1. The draft agenda as contained in document WTO/AIR/COMTD/SE/3 of 16 February 2016 was 
adopted. 
B. "CHALLENGES AND OPPORTUNITIES EXPERIENCED BY SMALL ECONOMIES WHEN 
LINKING INTO GLOBAL VALUE CHAINS IN TRADE IN GOODS AND SERVICES" 
(WT/COMTD/SE/W/31) 
2. The Chairman said that item B concerned the background note prepared by the WTO 
Secretariat on the subject "Challenges and Oppo rtunities Experienced by Small Economies when 
Linking into Global Value Chains in Trade in Goods and Services". The paper had been the focus of 
two meetings on 5 June and 29 October 2015 and had generated a lot of discussion. He said that after addressing global value chains (GVCs) in the agri-food and seafood sectors, Members would 
continue their examination with a focus on the textiles and apparel sector. He explained that after 
a brief introduction by the Secretariat, there woul d be a presentation from a representative of the 
Japan External Trade Organization (JETRO) followed by remarks from a textiles and clothing expert 
with years of experience working for the former International Textiles and Clothing Bureau (ITCB). 
Lastly, another textiles expert from the International Trade Centre (ITC) would be the final 
speaker. WT/COMTD/SE/M/31 
 
- 2 - 
 
  (i) Value Chains in the Textiles and Apparel Sector (Section 3.1.3) – Introduction by WTO 
Secretariat 
3. A WTO Secretariat representative said that he wished to give a brief overview of the value 
chains in the textiles and apparel sector based on the Secretariat background note. He said that he 
would focus on two issues: first, the basic structure of value chains in the textiles sector; and 
second, how small economies participate in textiles value chains, based on trade data.  
4. He mentioned that the Secretariat report included 32 small economies from the Caribbean, 
Central American, African, Asian and Pacific regions. He recalled that a textiles value chain consists 
of specific stages. It starts with raw materials in the form of natural fibres. These are then transformed into intermediate components such as yarn and fabric. They are thereafter manufactured into apparel or other final products. This is known as the assembly stage and 
includes "cut, sew and trim" activities. Once the final product has been produced, it is distributed 
and marketed to the consumer. After sale services constitute the last part of the chain. He explained that the textiles value chain was buyer-driven with the lead firms located downstream, 
close to the consumer. Lead firms were mainly large retailers or brand manufacturers.  
5. He discussed the value chains in terms of how the value-added was distributed. He referred 
to the "smiley curve" or a chart in the paper that depicts various stages of production and kinds of 
services. The curve indicates which activities gene rate higher value addition. He said that the 
bottom of the smile showed the assembly stages – cut, sew and trim - which represent the lowest value-added content. He said that possible upgr ading paths included moving from the assembly 
stage to becoming a manufacturer of intermediate textile products or being involved in the 
purchase of intermediate products. There was also the logistics segment of final apparel. Even 
further up in the value chain, were design activities or original brand manufacturing which was where many lead firms were placed. He explained that the assembly stage could be very important 
in terms of revenue and employment generation. 
6. When looking at trade data for the 32 small economies used in the study, he said that 
textiles and apparel was the most important in trade terms and accounted for US$17 billion or 5% 
of small economies' exports. He said that the repo rt also looked at geographic distributions. The 
ten small economies in Central and South America are the biggest traders in textiles and apparel products with exports at US$10 billion and imports worth US$8 billion. The report also looked at 
the share of textiles and apparel in different sma ll economies located in different regions of the 
world. For three small economies in Africa, te xtiles and apparel exports accounted for 28% of 
overall exports. For eight Asian small economies, the sector made up 17% of overall exports. The 
sector was important for most small economies, with the exception of small economies in the 
Caribbean which appear to be less integrated into value chains in textiles than small economies in 
other regions.  
7. In regard to where small economies are positi oned in the value chains and the share of 
intermediates in the exports of small economies, he explained that these accounted for some 10% 
of exports of small economies in textile produc ts. This meant that exports of final products 
amounted to 90%. When this share of intermediates was compared to world exports, it was seen that small economies accounted for 35% and that they really were specialized in the assembly 
stages of the textiles and apparel value chain. The picture overall showed  that 70% of all small 
economy textile imports were intermediate inputs assembled into the final products and then exported. The report also showed that small economies in all regions tend to be specialized in the 
final stages of the value chain. In regard to the geographical pattern in the value chain, inter-Asian 
imports accounted for 88% of textile imports. Ce ntral and South America tended to source more 
textile inputs from North America which made up  41% of their textile imports. In regard to 
exports, Europe was the main export market for small economies in Africa and Asia and accounted 
for 47% of exports of African small economies an d 46% of exports of Asian small economies. For 
small economies in Central America, North America was the biggest export market and made up for 81% of exports. WT/COMTD/SE/M/31 
 
- 3 - 
 
  (ii) Economic Upgrading in Textiles and Apparel Value Chains: Possibilities of Accessing Niche 
Markets – Example Mauritius – (Presentation by Video Conference – IDE-JETRO Japan) 
8. The second speaker was Mr Takahiro Fukunishi from the Institute of Developing Economies 
a n d  t h e  J a p a n e s e  O f f i c e  o f  E x t e r n a l  T r a d e  ( J E T R O ) .  M r  F u k u n i s h i  s a i d  t h a t  h e  h a d  b e e n  d o i n g  
research on export-oriented apparel industries in low-income countries since the early 2000s. He 
had focused on Madagascar which had experienced some success in this sector, mainly because of the increased investment it had received from Mauritius. Apparel exports from Mauritius began in 
the mid-1970s when sugar was still the main export. Apparel products replaced sugar in the 1980s 
and 1990s as a main export. This was due largely to the substantial structural changes in the Mauritian economy. 
9. He explained that already in the early-1970s, the Government of Mauritius had set up 
Export Processing Zones (EPZs) in order to diversify its economic structure. At the same time, the 
apparel industry in Hong Kong, China was looking for a potential location where it could invest since its quota under the Multifibre Arrangement (MFA) had been reached and it had the potential 
to further increase exports.  
10. Despite being somewhat remote from Asian markets, Mauritius had several advantages as 
an alternative production site. There was, at the time, no MFA quota for Mauritius and duty-free 
access to the European Union (EU) market was available based on the Lomé Convention (though 
textiles had to be made in Mauritius). Wages were low and the quality of institutions and level of governance were relatively better than in othe r developing countries. Furthermore, it was a 
politically stable country with good macro-economic indicators. 
11. He explained that the facilities and logistics for conducting trade were well managed, mainly 
because of the existing sugar export industry. Following several foreign and national direct 
investments in the textiles and apparel sector in the 1980s, apparel exports grew rapidly. Due to a 
small population, the industry began to hire a su bstantial part of the labour force, bringing 
unemployment down to 3% in 1990. Since the industry employed mostly unskilled women workers, there was a significant increase in employment, which helped to reduce the poverty rate 
and income gap levels. By the early 1990s, however, wages had doubled and several apparel 
factories relocated to countries with lower wages, such as China, India and Bangladesh. 
12. He explained that garment producing firms then shifted their factories from Mauritius to 
neighbouring African countries, particularly to Madagascar. Consequently, exports from Mauritius 
stayed flat, while they increased in Madagascar. 
13. He said that for the past ten years, however, apparel exports from Madagascar had been 
decreasing. He said that financial services and tourism were becoming the next leading industries. 
As for Mauritius, during the 1980s and 1990s, the Mauritian apparel industry achieved a higher 
degree of labour productivity to deal with stea dily rising wages. There were two sources of 
productivity growth at the time: the first was that efficiency in production had improved; the 
second was that the price of products had increased. 
14. The shift of the production to Madagascar of low-value products, such as basic cloths and 
apparel, contributed to the rise of the average price. In spite of higher costs, however, the 
Mauritian industry succeeded in obtaining orders of high-value products. He explained that this 
was by no means easy. A good comparison was Bangladesh which began exporting apparel 
products in the late 1970s. However, Bangladesh was still producing low-value products even after four decades. He said this was mainly due to the very slow rise of wages in Bangladesh. It showed 
that even though Bangladesh had lots of experien ce in one sector, it did not necessarily lead to 
successful upgrading. 
15. He underscored that a good business environment, including a focus on the importance of 
logistics, was a necessity. This was important because high-value products were generally highly 
sensitive in different sales seasons when shor t delivery times were required. He said the 
advantage of being a small country was that the growth experienced by on e industry effectively 
increased the national budget and allowed governments to invest in infrastructure and institutions. WT/COMTD/SE/M/31 
 
- 4 - 
 
  16. He explained that the Mauritian industry was also fortunate because when its textiles sector 
started to grow in the 1980s, there were fewer co mpetitors in the market. Also, textile companies 
were not forced to exit the market even though th ey faced higher costs. The vast trade and export 
experience of Mauritius had also built trust with buyers in the EU market where Mauritius was seen 
as a niche supplier. 
17. In closing, he said that there was another critical factor. It concerned the substantial 
presence of local entrepreneurs. Unlike foreign-ow ned firms, they were more likely to stay in 
Mauritius instead of closing and shifting to other low-cost countries. Even though some of the main 
production facilities relocated, the market ing, research and development functions and 
sample-making sections each remained in Mauritius.  
18. The representative of Chinese Taipei referred to the cases of Mauritius and Bangladesh, two 
economies whose development provided a model for other small economies. He said that the 
attraction for foreign investment to those economies generally originated in their labour-intensive activities and low wages. He explained that when  these products were exported over a certain 
length of time, wages tended to increase, which usually resulted in foreign investors leaving. This 
had happened to several small economies. They then  needed to go through a transition period and 
invest in upgrading to reach another stage of  product development. He asked what small 
economies could do to overcome this problem of increasing wages.  
19. Mr Fukunishi explained that it was true that small economies had a tendency to face 
increased wages. They had to address the problem as quickly as possible and he added that the 
best way was to enhance productivity by updati ng equipment, improving the business environment 
and upgrading product quality.  
20. The representative of Sri Lanka asked about the experiences with sustainability of the 
textiles industry from the point of view of vertic al integration and about the success of the industry 
and whether it depended on links to internationa l markets. He said that many countries shared 
experiences with buyers, many of whom were th e same. Given this scenario, he asked about the 
future of this industry for small economies.  
21. Mr Fukunishi said that in regard to vertical integration, a difficulty for the weaving and 
spinning industry was that it was capital intensive and did not relocate easily. He said that these 
industries were concentrated in several countries like China, India and Pakistan. The vertical integration of the garment producers and the textiles industry was not without difficulty today. The 
textile mills were set up 20 or 30 years ago and their established positions made it difficult for new 
entrants and for vertical integration generally. He suggested that rather than integrating in the upward value chain, it would be recommended to  shift to other high value-added sectors like 
electronic appliances. International markets were increasingly competitive and other factors could 
be considered. For example, working conditions ca me to the fore with the recent collapse of the 
textile plant buildings in Bangladesh. He explained that before the accident, the international buyer 
had a monopolistic power and could set prices and time deadlines. However, the buyer now had to 
take working conditions into consideration. He said this may shift the relationship between buyers and sellers in the future. 
(iii) Trade in Textiles, Statistics for Countries an d Regions and Structure of Global Value Chains 
in Textiles and Clothing Trade – (Representative of Guatemala) 
22. The Chairman introduced Ms Dinora Dias, a textiles and clothing expert, who had worked for 
many years at the ITCB in Geneva. An economist with 23 years of experience, she was an expert 
on trade policy, negotiations and the implementati on of trade agreements related to textiles and 
clothing. 
23. Ms Dias said that she wished to discuss what the trends had been in exports in the textiles 
and apparel sector. The sector had undergone sign ificant changes since it was integrated in 2005 
into the WTO's trading system. It was also now included in several free trade agreements (FTAs) between different exporters. This had influenced the export and import trends. She explained that 
her presentation sought to link the trend of trade flows with the integration of value chains so as 
to determine the kind of impact this has had on small economies. She said that the trends of 
exports in textiles and clothing had been on an upward trend. There had been drops in textiles WT/COMTD/SE/M/31 
 
- 5 - 
 
  trade in 2001 and in 2009 when trade dropped by 16% and clothing by 13%. These declines were 
still lower, however, than the drop in manufac tured goods overallm which had been near 20%.  
24. In her opinion, one of the most important aspects of this sector was the setting up of free 
trade areas between different countries with interests in the textiles and clothing sector. She 
asked how this related to GVCs. She explained that there were only a handful of global buyers and 
t h a t  t h e y  w e r e  m a i n l y  t o  b e  f o u n d  i n  d e v e l o p e d  c o u n t r i e s .  T h e y  w e r e  t h e  o n e s  w h o  m a d e  t h e  investment decisions, and this in turn determined where global buyers made their purchases. In 
this way, the buyers maintained a flow of raw materials and inputs from developing countries 
where costs were lower. Once produced, the produc ts would be distributed by specific companies. 
She cited an example of a global buying chain with a presence in 87 countries and on all 
continents. The value chain behind these stores contributed substantially in shaping the export and 
import figures.  
25. She said that world imports of textiles and clothing were more or less stable but noticed 
slight reductions after the elimination of textile quotas. She explained that the reason behind this 
was that imports were then more widespread across various countries. The growth of imports was 
actually increasing. Brazil; China; Korea, Repub lic of; the Russian Federation; and Turkey were 
countries that absorbed the production processes. The value chain was then re-directed to where 
there was a critical mass of consumers with a gr owing middle class. Smaller countries followed a 
similar trend such as Colombia, Malaysia, Peru, Thailand and Uruguay. She said these countries were dynamic importers, nevertheless in smaller quantities. The textiles sector was a capital-intensive one with significant investments needed in equipment and machinery, and not all 
countries had the means to invest. Due to the large expense, the textiles industry tended to 
concentrate in developed countries. Other developing countries had also entered this market, even though it was still dominated by developed countries.  
26. Other factors which influence global purchasing and sales included the trade policies of the 
country. Many smaller countries took advantage of preferential tariffs, or regional trade areas where there was preferential treatment for textiles and clothing, i.e. in Central America and the 
Dominican Republic. There was also the EU's European Partnership Agreements (EPA) with the 
African, Caribbean and Pacific (ACP) countries. This had resulted in other destinations of resources that affected the vertical integration in the industry. Then there were other economic factors such as exchange rates, inflation, productivity, infr astructure, the trading environment, the labour 
situation, the geographic location of the country, the investment climate and trade facilitation and 
logistics.  
27. She explained that the most basic operations included product assembly and constitute the 
origins of GVCs. From a development perspective, the aim was to eventually diversify away from 
just assembly productions. This in turn would create more solid links to the local and regional economy. She said that countries like China were part of several GVCs dealing with all kinds of 
fibres such as yarn, wool, cotton and synthetic fibres. China had an unrivalled position as 
compared to other exporters. But other exporters too had increased their imports and exports, especially amongst themselves. This group includ ed Hong Kong, China; India; Indonesia; and 
Tunisia. All had benefitted in the post-quota period, mainly because of their increased 
competitiveness.  
28. When looking at small economies she said that the main exporters of textiles and clothing 
included El Salvador, Honduras and Sri Lanka. Others, with textile shares of less than half of total 
exports, included Ecuador, Guatemala and Paragu ay. She added that the United States (US) was 
the main importer of textiles and clothing products from these countries. 
29. She recalled that other small economies had experienced difficulty in maintaining a share in 
this sector and had diversified away from clothing assembly operations. These concerned mainly 
Cabo Verde, Fiji, Guyana, Jamaica and Trinidad  and Tobago. She thought these countries had 
probably diversified to fabric production and had created facilities for design and establishing operations for finishing operations such as washing and painting and aspects of logistics 
operations. In the case of Sri Lanka, it had expe rienced a 3% addition in value-added in constant 
prices. She said that if one looked at preferenti al access, the case of the US showed that those 
countries with preferential access to the US market had considerably increased their exports in the 
period 2005 to 2015. She said that countries such  as the Dominican Republic could also export 
other products, such as locally made fabrics under its agreement with the US.  WT/COMTD/SE/M/31 
 
- 6 - 
 
  30. She added that even though some small economies had been losing market share, they 
were able to enter into certain niche markets in the clothing sector, such as the carnival clothes market in Trinidad and Tobago. In Ecuador, fo r example, the Andean design and traditional 
clothing was an important artisanal industry even though it was not exported. Paraguay had its 
own niche with lace. Guatemala also had its traditional clothing with the Mayan culture.  
31. The representative of Paraguay said he a ppreciated the presentation and asked whether 
rules of origin were more relevant than preferential market access in gaining market share in 
preference granting countries. He also asked if th ere was any further analysis about export figures 
to developed countries and South/South exports. Finally, he sought information about the quantity of non-preferential measures which arose in this sector.  
32. Ms Dias responded that the rules of origin regimes were essential but that she could not say 
whether they were the more important. When looking at the Caribbean Basin Initiative (CBI) for 
the Caribbean countries, she said many countries in the region exported very little to the US because they did not comply with US rules of origin requirements. She said that the few products 
they did export were made from US fabric and added that if the rules were more flexible, then the 
sector would most likely develop. In response to the question about South/South trade, she said that she had not analysed this in detail.  
33. The representative of Guatemala asked about the niche markets for traditional clothes and 
whether this sector could actually expand or did other competitive pressures exist which would 
hinder the development of the industry?  
34. Ms Dias responded by saying that it was an im portant niche and that production was of high 
quality. She added that production should be integrat ed into the global distribution chain so that it 
could be exported to other countries, albeit  in small quantities. 
(iv) Benefits of Regional Integration for Small Economies in the Textile and Apparel Sector – 
(Presentation by the ITC) 
35. The Chairman then introduced a representative  of the International Trade Centre's (ITC) 
programme on fibres, textiles and clothing.  
36. The representative of the International Trade Ce ntre said that the focus of his presentation 
would be on regional integration and benefits for small economies. He wished to discuss business 
and how governments could support efforts in this sector, especially at the regional level. It was important to note that large competitors were mainly vertically integrated but that small 
economies faced difficulties with developing a vertically integrated industry. He said that many of 
the small economies researched in the Secretariat study were vertically integrated. There were products where integration was evident, such as knitted products in Sri Lanka and Mauritius and 
some Central American countries. At the same time, the major buyers continued to shift away 
from sourcing their products from small suppliers and use more strategic suppliers who manage multiple factories and international locations. He said that buyers wanted partners who provided 
integrated solutions and explained that the textiles industry today was actually not a 
manufacturing industry, but a services industry. Whil e it was relatively easy to produce a garment, 
it was rather difficult to provide all the services that accompany a product. 
37. He elaborated and said that countries which could not supply integrated solutions at the 
national level, could aim for the regional level. Regionally, he said many of the rules of origin 
requirements came into play. These usually favoured regional cooperation and or integration. He added that working along the regional value chai n using the comparative advantages of different 
countries could provide small economies with integrated solutions. 
38. He saw two main strategies, for companies and for sectors to remain competitive or to 
increase competitiveness. The first one was not without risk. One could improve productivity by 
reducing costs, but he said the issue here was that many companies across the world were taking 
similar action. As a result, there would always be someone who was more competitive or less expensive than one's own operation. This was cons idered to be a downward spiral in terms of 
costs and benefits. The other strategy focused mainly on services and raised the question whether 
or not the services needed by buyers could be provided. He said that there were two possibilities WT/COMTD/SE/M/31 
 
- 7 - 
 
  of working together at the regional level. There we re regional supply chains, as well as marketing, 
retailing and branding services, where actions could be taken to target national niche markets or regional and traditional markets in the area of distribution services.  
39. He referred to the "smiley" curve which the Secretariat had discussed in its paper. At the 
bottom of the smile is the production part of the ch ain, the first part of the strategy. If one seeks 
to increase competiveness by reducing costs, then  a producer would remain at the bottom of the 
smile. There would not be any movement either in the direction of marketing and distribution 
services or in research and design. In terms of regional integration, he saw one option. If small 
companies sought to tap into large and global buyers, it would be best to partner with other companies at the national or regional level. However, the partners would have to have the same quality, the same approach and the same requ irements in the area of corporate social 
responsibility to supply the major buyers. 
40. Another option, which in his view was more viable, was to move up the smiley curve to the 
left towards purchasing and research and design. This meant that small suppliers would take over 
the services which the buyer himself had provided such as material sourcing, inbound and 
outbound logistics and certain design aspects. 
41. He explained that a third option was also in the area of regional cooperation and involved 
moving to the right-hand side of the curve towards distribution and marketing. There was scope 
for expanding into niche markets. But this also requ ired establishing good partnerships with people 
in the market, especially in regard to distribution. 
42. He provided an example with the Association of Southeast Asian Nations (ASEAN) and 
showed how regional cooperation could be used to focus mainly on purchasing and design. The 
private sector had been working with the Asian Fede ration of Textile Industries (AFTEX), trying to 
find an integrated solution for the major buyers. The fibre came from Africa, but the work was 
done in the region. The yarn and fabric came from Indonesia, the inner lining from Malaysia, 
Thailand provided the labels and threads, the buttons came from the region and all was sewn 
together in the Lao People's Democratic Republic, Cambodia and Viet Nam. The garment 
manufacturer would be behind the regional level. The advantage of this type of production was 
entry to the EU market with the regional accumula tion possibilities and duty-free exports. He said 
that this example was already taking place and represented a competitive factor for small economies.  
43. When one looked at Central America, he said there were export possibilities to the EU and 
US market from the Central America Free Trad e Agreement (CAFTA) area. This was possible 
provided that producers fulfilled the rules of origin  requirements, such as "yarn forward" for the US 
and, perhaps integrate some fabrics from other North American Free Trade Agreement (NAFTA) 
c o u n t r i e s  s u c h  a s  M e x i c o  o r  C a n a d a  t o  g a i n  d u t y  f r e e  a c c e s s  t o  t h e  U S  m a r k e t .  T h i s  r e g i o n a l  cooperation was happening already in places like Central America but on an individual enterprise 
basis.  
44. He said that the third option for regional integration to capture value along the chain was to 
move towards distribution and marketing services or retailing. He referred to the example of 
Mauritius and its success with a move into the South African market under the umbrella of the 
South African Development Community. This helped Mauritius to be seen by retailers as a supplier 
of choice of high quality garments.  
45. He cited Sri Lanka as another example. He said that the country had been a very successful 
intimate apparel manufacturer and had established its own brands, not only in the local market, 
but also in India, by using the FTA between Sr i Lanka and India and also under the South Asian 
Association of Regional Cooperation (SAARC). Sri La nkan companies had set up operations in India 
and it was possible to sell their products using their own labels. However, in order for this to 
happen, he said a company needed to have partners in the market.  
46. He added that knowing who to supply in this regard was very important, especially if 
companies wanted to export to big markets like China or India or Brazil. In this case, he suggested 
that suppliers go through other multinational suppliers with existing operations in such large 
markets as China rather than seeking access to th e Chinese market directly. Regional suppliers, he WT/COMTD/SE/M/31 
 
- 8 - 
 
  explained, had to know first what was available regionally. They needed to know who was who in 
the region and who produced what at the regional level. Supply and demand requirements for textiles and clothing had to be analysed in the region and it helped if a regional strategy was developed that engaged all stakeholders from the pu blic and private sectors, the logistic services 
providers and the banks. He cited an example in  Africa where regional strategies were being 
developed to further cotton to clothing strategies. The national members were now aligning their strategies to the overall regional strategy.  
47. There was also the possibility of developing a regional supply chain of intermediary products 
which existed already. For example, many clothing manufacturers could be supplied by one fabric mill. The latter could supply hundreds of clothing manufacturers. 
48. He said that there was also the issue of partnership development along the value chain such 
as partnering with the major buyers in the markets that were being targeted or with a 
multinational that had been set up nationally in one's domestic market. The consolidation of the industry was driven by buyers which were primarily multinational companies. He said that in many 
countries, multinational firms exist which consolidate the industry on behalf of the international 
buyers. This is why a partnership with the buyer is  so important. Also, working with transnational 
foreign companies so as to engage them to tran sfer knowledge, know-how and market linkages to 
local companies and develop local skills was highly important, especially in helping to build lasting 
ties and avoiding that company's relocation.  
49. Another factor was active versus passive consolidation. In Sri Lanka, there was a 
consolidation of many smaller firms into larger ones. This had made the industry more 
competitive.  
50. Finally, he said that he wished to summarize th ree main points of his presentation. The first 
was that regional cooperation along the value chain responded to where the major industry 
developments were and to buyer requirements to  work with one partner which could represent a 
supply chain consolidation. It was also important to cooperate among competitors, especially if it were a small economy, by providing an inte grated solution at the regional level. 
51. The second, was that regional cooperation could be targeted at all parts of the smiley curve 
that captured value addition in GVCs. He said that the most promising for small economies was to focus on the supply chain and integration at the regional level.  
52. Finally, the third point was that it was also important to know the governance relationships 
in the apparel value chain. A partnership along the regional value chain only worked if one 
partnered with major buyers and transnational companies. 
53. The representative of Cote d'Ivoire thanked the representative from the ITC for the 
instructive presentation. He wished to comment on a point made during the presentation which 
indicated that while cotton came from Africa, all the production took place in Asia. In this regard, he asked whether the labour cost determined the final production in Asia.  
54. The representative of the International Trade Centre indicated that the cotton which was 
coming from Africa could have been cotton from anywhere. He referred to ASEAN as a provider for 
an integrated solution for the buyer. He noted that the industry was no longer about manufacturing and provided the example that too many companies could produce a decent shirt. 
Therefore, he expressed the importance of prov iding services around manufacturing, which meant 
organizing an entire value chain including the ma king of the garment (cut, sew and trim) and, at 
the same time, providing the yarn, fabrics and accessories needed to produce a shirt. He indicated 
that this process had successfully been done in ASEAN. He noted that it was relatively cheap to 
have garment manufacturing in Cambodia, Lao People's Democratic Republic and Viet Nam in comparison to other destinations. He also drew attention to Indonesia as having a relatively 
competitive textiles industry, but a less competitive garment industry. In this regard, he explained 
that it was important to work at the regional level in order to find the best services to serve the international client. For international buyers, the most important cost was not the cost of the garment itself but the cost of losing money.  WT/COMTD/SE/M/31 
 
- 9 - 
 
  55. The representative of the European Union, asked for further information about the processes 
in the regional industry federation of ASEAN, which she understood as being successful in using 
the left hand-side of the smiley curve. She asked to which extent that was due to the involvement 
of industries versus government and whether governments pursued the framework or whether the 
companies had good networks through this federation. 
56. The representative of the ITC noted that it was an initiative that had started at the private 
sector level. Different associations had aligned themselves to form a federation, which also got a 
push from a project which brought people together and tried to involve the buyers that were 
already sourcing the region but were looking for an integrative solution due to rules of origin requirements. He said that a relevant question today related to some of these members being ASEAN members but also Trans-Pacific Partnership (TPP) signatories. The latter would give them 
additional advantages over others. Only time woul d tell how the industry would eventually decide 
to work together.  
57. The Chairman thanked all Members for thei r questions and comments from the three 
speakers. 
(v) National Case Stories 58. The Chairman said that under this item, Members would have a chance to share their 
experiences about the challenges they had faced when trying to integrate and upgrade into the 
textiles sector. 
59. The representative of Sri Lanka presented the textiles industry in his country. He said that it 
had evolved from a labour-intensive industry in 1970 to one which was service-oriented and 
knowledge-based. He added that Sri Lanka was a small-island country and that its literacy rate of 
92.5% had given Sri Lanka an advantage for the textiles sector. He indicated that  Gross Domestic Product (GDP) was around US$75 billion, of which 32% was represented by the textiles industry. 
He noted that recent exports totalled around US$11.2 billion and that imports were worth 
US$19.2 billion. Sri Lanka was, therefore, highly de pendent on imported items. More specifically, 
apparel exports accounted for US$4.9 billion. Th e industry directly employed around 400,000 
people and indirectly employed close to one m illion people. Since the mid-1970s the industry had 
continued to grow.  
60. He indicated that prior to 2005, the industry had access to world markets through the quota 
system, specifically through the MFA. Main market s at the time were the US and the EU. The US 
market accounted for 58% of exports in 2004. After the removal of the quota system, the 
industry's market-share shifted toward the EU. The total share of the US and the EU market 
together totalled 88% of exports. There was also a slight increase to other destinations, in 
particular emerging markets. Furthermore, there had been a considerable change in the product 
mix, moving from woven to knit products. This shift helped Sri Lanka to consolidate and capitalize its competitive advantage.  
61. He said that Sri Lanka's competitive edge focused on product categories, value chain 
verticality, speed and agility, world class manufacturing facilities and services, ethical sourcing, logistics, environmental and green initiatives an d the overall business environment. The highly 
skilled labour force had also led to cost competitiveness, while the industry had collaborated with 
universities and vocational institutions to upgrade technical skills. He also spoke about the role 
played by private sector associations and recalle d the Joint Apparel Association Forum (JAAF). It 
consisted of major apparel sector associations which had worked closely with academic and 
training institutions. 
62. Sri Lanka was now concentrating on selected product areas. It had a five-year strategic plan 
which had been prepared by the industry in 2003 to  meet the challenges arising from the removal 
of quotas under the MFA. He indicated that tec hnological, academic and monitoring organizations 
had predicted that Sri Lanka would not be on th e sourcing map due to the absence of vertical 
integration. However, the Sri Lankan industry ha d decided to challenge this by creating a plan 
which identified four priority product categories: intimate apparel, sportswear, casual wear and 
children's wear.  WT/COMTD/SE/M/31 
 
- 10 - 
 
  63. The first five-year strategic plan considered backward integration as essential for moving up 
the value chain. In this regard, investments had been made including in knit fabric, finishing off imported woven fabric, washing/finishing and embroidery. Joint ventures were set up with international partners and investment had been made in numerous research and development 
(R&D) centres in finishing and washing. Further, investments had been made in knit fabric 
products, allowing Sri Lanka to have a competitive advantage and value chain verticality.  
64. He referred to Sri Lanka's speed and agility in the industry. One of the logistics strategies 
had been to ensure speed to get to the market so  that the products were delivered on time to 
avoid cost accumulation. The industry had a succ essful public-private-partnership policy and a 
business enabling environment. This contributed to  continuous upgrading of technology, design 
and product development and innovation. This would offer a better position to the Sri Lankan 
apparel sector in the GVCs. 
65. He mentioned that Sri Lanka's apparel industry had created two multinational players and 
that its apparel producers had moved to neighb ouring countries including Bangladesh, India, 
Indonesia and Viet Nam. 
66. He considered Sri Lanka to be an ethical sourcing destination with strong labour legislation 
which ensured safety and healthy working conditions for workers. Sri Lanka also had a number of 
labour conventions, which compelled the country to provide a manufacturing environment free of 
discrimination, sweat shops and child labour. The industry itself introduced a programme called "garments without guilt", certifying the articles had been produced free of child labour and discrimination of any kind, including sweat shop practices, and with freedom of association. 
67. He said that Sri Lanka was located in the southern tip of India, connecting the East and West 
by sea routes. Sri Lanka was becoming a popular transhipment hub where all major shipping lines would connect through the region using Colombo as the ship hub. There were 21 major shipping 
lines which accounted for 91% of world trade, using Colombo as a transhipment point. Sri Lanka 
had the best connectivity to the EU, US, Africa, Middle East and Asia from the sub-continent with the highest number of feeder operations. Sri Lank a was handling around five million containers at 
the Colombo harbour. 
68. He referred to Sri Lanka's environment and green initiatives including the World's first 
Leadership in Energy and Environmental Design  (LEED) Platinum Rated Initiative, the World's first 
ISO 50001 certification for apparel factories, Asia's first Carbon Neutral and Carbon Conscious 
apparel factory and the production of the world's first carbon neutral brassieres. Such initiatives 
indicated that Sri Lanka was developing this industry in collaboration with partners in the value chain.  
69. He said that the industry had evolved from contract manufacturing to a service and 
knowledge industry. The industry started with ba sic manufacturing, and then moved to sourcing 
management, to supply chain management and subsequently to social accountability and 
sustainability.  
70. Sri Lanka's target was to be among the world's top ten apparel manufacturing countries by 
2025, and to achieve a US$8 billion turnover by 2020. It wished to transform the industry by 
becoming a full package service provider of fast fashion and to become the knowledge and fashion 
hub in the region. It also wished to succeed in branding and he said that a few local brands were 
already catering to the national market and some neighbouring countries. 
71. He added that consolidating and expanding the existing markets through preferential access 
arrangements would provide opportunities for further expansion toward sustainability and a more 
competitive business environment for this particular industry. 
72. He mentioned that Sri Lanka's major challenges included the proliferation of preferential 
arrangements and the lack of a level playing fiel d. He explained that when the apparel industry 
qualified for preferential arrangements, it was expected to deliver a double transformation first: from fibre into yarn and from yarn into fabric and only the items made out of the fabric qualified for the preferential entitlement. That was a cha llenge that many countries faced. Most of the 
smaller countries had not gone into that complete vertical integration. Recently, Japan had relaxed WT/COMTD/SE/M/31 
 
- 11 - 
 
  these rules of origin, allowing fabric to be used – going from a double transformation to a single 
transformation. He said this had helped many countries access that market. He added that sometimes countries graduate from LDC status and lose their duty-free access or they enter into regional trade agreements with the preference-g iving country, thereby losing Generalized Scheme 
of Preferences (GSP) eligibility. Such a result could affect investment decisions. 
73. He concluded his intervention by saying that he considered the textiles industry to be the 
most important sector in Sri Lanka. He invited Members to get in touch with the IAAF in Sri Lanka. 
74. The representative of the Dominican Republic took the opportunity to present the textiles 
and apparel industry in the Dominican Republic, especially from the perspective of free trade 
zones. 
75. She said the textiles industry in the Dominican Republic had created some 40,000 direct 
jobs. Over the past five years it was the main job creator and represented the main export sector. 
Currently, there were 110 companies active in the textiles industry. 
76. She noted that from 2004 to 2009, there had be en a drop in the exports of textiles and 
clothing from the Dominican Republic because of  the end of the MFA and the end of the quota 
system. Quotas had initially protected the Domini can Republic from competition. However, the 
industry did show that it could adapt very well with new trade policies. In 2009, the sector began 
growing again with a sophisticated production sy stem, including packaging systems, a better use 
of market niches and the development of manufacturing processes. 
77. She mentioned that more jobs were added between 2011 and 2015, with 45,000 people 
being directly employed in the textiles industry in 2015. She said that the Dominican Republic now 
exported 168 product lines to 66 different countries. 
78. Many of the products produced in the Dominican Republic were market leaders. For 
instance, the country was the first Latin American exporter of cotton products to the US, including 
wool apparel, the sixth exporter of brassieres to the US and the seventh exporter of synthetic 
shirts for men and children. In 2004, more than 98% of exports were apparel and less than 2% 
were textiles. In 2014, apparel represented 67.50% of total exports in the industry, while textiles 
represented more than 32%. She explained that there had also been diversification and greater 
value added to products. The textiles industry had recovered because it had been capable of diversifying and creating inputs, through thre ads and materials, and started to develop in 
sportswear, formal clothes, winter clothes and u n d e r w e a r .  S o m e  t r a d e m a r k s  p r o d u c e d  i n  t h e  
Dominican Republic included Columbia, Old Navy and Victoria Secrets. There had also been some 
transfer of technology to the Dominican Republic with the textiles industry having been a pioneer 
to draw its energy from biomass. The industry had diversified and was now focusing on specific 
products such as fibres, threads, elastic materials, adhesives and chemical products. 
79. In the Dominican Republic, coproduction with neighbouring Haiti had also intensified. There 
was a synergy with the preferential access schemes provided to Haiti by the US. Manufacturing 
activities were taking place in Haiti, while final work and packaging took place in the Dominican 
Republic. In the past few years, the Dominican Re public had established coproduction with Puerto 
Rico, which further increased the size and capacity of the textiles industry in the Dominican Republic.  
80. The representative of El Salvador presented the textiles and clothing industry in her country. 
A large part of its development and integration into value chains had occurred due to national 
investment policies that facilitated foreign investment and bilateral preferences which were later 
consolidated by signing FTAs with the main trading partners. 
81. The textiles and clothing industry had become one of the most important for El Salvador's 
economy due to various adjustments made in recent years, including vertical integration, 
integration of the synthetics cluster, specialization in garment making and increased use of 
technology and design services. As a result, the sector accounted for almost half of El Salvador's total exports. The commitment to vertically strengthen the national production chain by incorporating world-class companies, facilitated the expansion and management of a robust chain WT/COMTD/SE/M/31 
 
- 12 - 
 
  of suppliers and made it possible not only to si mplify the cost of handling and transporting raw 
materials, but also to increase innovation. 
82. She referred to the new challenges faced by El Salvador, such as the erosion of preferences 
through mega-regional agreements, the economies of scale available in large countries, access to 
financing to improve competitiveness and other internal aspects, both economic and social. She 
said that in a globalized world, it was important to face and address such challenges, particularly when the added value in these products was becoming increasingly specialized and had to respond 
to rapid changes in demand. 
83. S h e  s a i d  t h a t  a l t h o u g h  c o n d i t i o n s  h a d  b e e n  f a v o u r a b l e  i n  r e c e n t  y e a r s ,  E l  S a l v a d o r  w a s  
facing considerable challenges in the textiles sector. These included diversifying or specializing of products, developing markets beyond traditional ones, effectively transferring technology 
and sustaining employment. 
84. The representative of Guatemala said that in 1986, 75% of Guatemala's exports were 
traditional products such as coffee, sugar, banana, cotton and meat. However, in 2015, 75% of 
the exports were products which were not traditional. Of these, 40% were in the area of textiles 
and clothing. She said that Guatemala was now trying to enter the more complex stages of production such as cutting, trimming and stitching. 
85. She mentioned that initially the textiles industry of Guatemala only assembled pieces which 
had already been imported from other countries. However, with the development of the industry and foreign direct investment and with the trai ning of workers and improved equipment, the 
industry had managed to participate in each production stage including stitching, cutting, 
trimming, assembling and accessorizing. Guatemala was also making efforts to take part in the 
design stage. The industry accounted for 8.9% of  the national GDP and it was estimated that the 
sector created more than 180,000 direct or indirect jobs, a large share of which went to women.  
86. She explained that competition had continued to increase due to more actors on the market 
and wider choice. There had also been more regional agreements that were intensifying competition between producers. She said the industry continued to create jobs in the short term 
and that the country's highly qualified workers made it possible for Guatemala to compete in 
international markets. Also, the integration of the industry in value chains had helped to improve the response time and the quality of products ov erall. She added that Guatemala was now working 
to give greater legal certainty to the business environment. 
87. The Chairman suggested continuing the discussion on GVCs, as mandated in the decision 
taken in the Tenth WTO Ministerial Conference (MC10), and to focus at the next meeting on the 
services sector and how small economies benefited from integration in services value chains. He 
mentioned that consultations would be held to determine who should be invited to speak. He 
asked Members whether they would agree on having some speakers from outside Geneva, including experts in their field, who could sh are their knowledge and experiences and provide 
examples of value chains in the services sector . He explained that it was important to take a 
decision in advance of the next meeting so that funds could be secured ahead of time. He said that he would consult later on the potential speakers. 
88. The representative of the United States mentioned that she had found the discussion to be 
interesting, in particular on regional integratio n, and the country presentations from Sri Lanka and 
the Dominican Republic. She hoped the discussion would be useful for the small economies when 
considering their own domestic policies and reforms to further develop their textiles sectors.  
89. She made a comment on the process and indi cated that the discussions in the dedicated 
session should be Member driven and the direction taken should be agreed by the Membership. She recalled that in the past two dedicated sessio ns there had been little to no discussion among 
Members about the specific agenda or the presen tations under the item. In this regard, she was 
happy to hear from the Chairman that there was an intention to hold consultations on the future sessions regarding the invited speakers. She agreed with the proposal by the Chairman to invite external speakers. WT/COMTD/SE/M/31 
 
- 13 - 
 
  90. The representative of the European Union agr eed with the Chairman's proposal. She said 
that the EU welcomed the opportunity to focus on the textiles sector which the EU believed to be the 
strongest section of the Secretariat's report. It provided the clearest insights into the challenges and opportunities experienced by small economies when linking into GVCs. 
91. She said the examples and analysis of data provided focused clearly on the fragmentation of 
production processes and the addition of value across borders. This is the essence of the GVC phenomena and in this sense, this section aligns with the references and citations of literature on 
GVCs provided throughout the rest of the note. As previously identified, this is not the case for other 
sections of the note. 
92. She explained that the EU recognizes the importance of the textiles sector for developing and 
particularly least developed countries (LDCs). As one of the largest markets for finished products in 
the sector, the EU is active in supporting its developing country partners to integrate into value 
chains in the textiles sector. But, as the note acknowledged, participation in value chains alone was not enough. Measures were needed to support the responsible management of supply chains and to 
ensure countries realize maximum benefits in terms of inclusive growth and sustainable 
development. 
93. She added that the EU promotes responsible supply chains through different internal and 
external policies including trade policy. Responsible management of supply chains had a prominent 
place in the recently adopted Trade for All communication and the EU intended to continue and strengthen its work in this area.  
94. The Trade for All initiative deploys a series of trade policy tools to engage EU trading partners 
on sustainable development. These included FTAs and the conflict minerals Regulation, as well as 
innovative partnerships such as the Bangladesh Compact for improved working conditions in the Bangladesh garment and knitwear industry. Second ly, the EU contributed to the development and 
dissemination of internationally agreed principles and guidelines on Corporate Social Responsibility 
(CSR) and Responsible Business Conduct (RBC) including in specific sectors such as textiles. In regard to the development of the guidelines, the European Commission participated actively in such 
work in the Organisation for Economic Co-operation and Development (OECD).  
95. On textiles specifically, she said the EU had done a lot of work. A latest initiative was a project 
to support the OECD's work on responsible supply chains in the garment and footwear sector with a view to fostering responsible behaviour of multinational enterprises in these sectors, in particular in 
major textiles and garment exporters to the EU. In terms of dissemination, there were provisions on 
the promotion of CSR/RBC practices in EU trade agreements (e.g. Korea, Republic of, Central America, Colombia and Peru) and the most recent FTAs referred explicitly to internationally 
recognised guidelines and principles. She explained that once the agreements entered into force, 
CSR/RBC was especially important.   
96. The EU had also developed a project on RBC/CSR with trading partners in Asia (China, Japan, 
Myanmar, Thailand and Viet Nam). This project was to be implemented jointly by the OECD and the 
International Labour Office (ILO) and was to focus partly on the garment sector. 
97. She added that the EU looked forward to a meaningful engagement with all relevant actors 
and was open to making further reports in the Committee. She said that the paper identified 
implementation of the Trade Facilitation Agreement (TFA) as a key determinant for participation in 
GVCs. In this regard, she said the Secretariat note should provide all Members with further momentum for a rapid ratification and implementation of the TFA. 
98. The Chairman noted that he would be holding consultations in the near future on whom to 
invite for the next session.  
99. It was so agreed. WT/COMTD/SE/M/31 
 
- 14 - 
 
  C. MINISTERIAL DECISION ON THE WORK PROGRAMME ON SMALL ECONOMIES 
(WT/MIN(15)/40 – WT/L/975) – REDUCING TRADE COSTS 
100.  The Chairman recalled the decision which instructed the Dedicated Session to continue its 
work on the challenges and opportunities experien ced by small economies when linking into GVCs 
in goods and services. The decision also requested the Secretariat to conduct work on the 
challenges small economies experienced in their efforts to reduce trade costs, particularly in the area of trade facilitation. He mentioned that he  had placed this item on the agenda to hear 
Members' views on how they wished to address the topic of reducing trade costs. He felt that it 
would be particularly helpful to hear from Members about how to proceed with the discussion of this topic and also whether Members felt that presentations or studies or reports would be helpful in clarifying some of the issues which touched on  the subject. He recalled that the topic was also 
discussed during the Fifth Global Review of Aid for Trade in 2015 and in certain sessions which 
focused on the TFA. He noted that implementation  of the TFA promised to bring substantial cost 
reductions for traders in developing and least developed countries, thereby supporting increased 
economic activity, and potentially increasing government revenues. 
101.  He said that the development benefits of redu cing trade costs were impressive. According to 
the OECD's calculations, a 1% decrease in global trade costs would increase global income by 
US$40 billion at a minimum, with close to two-thirds of this amount accruing to developing 
countries. Governments, in dialogue with stakeholders, could work to identify the most distorting trade costs, how best to reduce them, and how to use effectively the different development finance instruments offered by a wide range of providers. Reducing trade costs was also an area 
where the private sector had much to offer and the development community much to learn. It was 
also an agenda that would maximize the contri bution of trade to delivering the sustainable 
development outcome as proposed in Agenda 2030 and the Sustainable Development Goals 
(SDGs). 
102.  Due to a lack of time, the Chairman did not encourage Members to share their views on how 
Members would tackle this subject in the Dedicated Session and instead noted that it would be 
included on the agenda for the next meeting. He invited Members to submit proposals on how to 
focus on reducing trade costs, either collectively or individually.  
103.  The representative of Guatemala recalled that  this item was suggested by the small, 
vulnerable economies (SVEs) and the group was wo rking on how to lead these conversations. She 
said the group would be holding consultations at the next session, during which it would be able to 
work with interested Members on how to lead this issue. 
104.  The representative of the United States did not have any specific comments about the issue 
concerning ways to reduce trade costs. However, he had a brief statement about the work in its 
broader context. He drew note to the work pr ogramme of the Dedicated Session, which included 
continued work on both the opportunities and ch allenges experienced by small economies in the 
global trading system. In this context, and as his delegation had noted at the last General Council 
meeting, he thought it was appropriate to try to pin down who, exac tly, were the "small 
economies". 
105.  He said that paragraph 26 of the Nairobi Declaration in 2015, and the deliberations that led 
to its inclusion in that Declaration, were important context for the work programme. His delegation 
was not questioning the validity of any part of the Declaration, but said it was now up to Members to come to the clearest possible understanding of what was intended in paragraph 26, so that the 
follow through could be as coherent as possible. 
106.  He considered that over the last 14 years, a group of Members had pressed to be deemed 
SVEs and accorded additional consideration as compared to other developing countries. The report 
by the Secretariat, "Challenges and Opportunities  Experienced by Small Economies When Linking 
into Global Value Chains in Trade in Goods and Services", (WT/COMTD/SE/W/31) cited two groups of Members. The first group of 45 countries met ce rtain criteria related to a share of world trade 
listed in Annex I of the Agriculture Draft Modalities (TN/AG/W/4/Rev. 4). However, that country 
designation was specific to a particular negotiating context, and to sector-specific draft modalities 
that were never agreed. Furthermore, the criteria  themselves were based on trade data that was 
more than 12 years old. The second group was supposedly the 32 Members who had been active WT/COMTD/SE/M/31 
 
- 15 - 
 
  in the Small Economies Work Programme. He recalle d paragraph 1.4 of the Secretariat’s report on 
GVCs, which said that "small size d countries were frequently referred to using a variety of terms". 
107.  In this regard, he asked which were the small economies in 2016 and how should the 
meaning of the term "small economies" be further understood. Perspectives on countries falling 
under this kind of designation could differ depending on specific contexts. He hoped to hear more 
from those Members that considered themselves to be small economies. In particular, he said he wished to understand what they considered to be the characteristics of small economies that 
warranted special examination and how these characteristics distinguished them from other 
developing economies. He was interested in inclusive, frank discussions on the contributions of individual developing country Members in the system. He felt that these contributions should be commensurate to individual Members' trading status in 2016, and not their status in 2001, 2005 or 
2008. 
108.  The representative of Japan touched upon the remarks made by the US on the question 
surrounding the scope of small economies. Base d on the Work Programme on Small Economies 
and under the instructions given at MC10 and the Ninth WTO Ministerial Conference (MC9), he felt 
that there had been fruitful discussions over the challenges and opportunities experienced by small 
economies when entering GVCs in trade in goods and services. In this regard, in the process of 
these discussions, he considered that it woul d be useful and significant to share a common 
understanding, to the extent possible, as to whom Members were referring to and which Members would benefit from such discussions. He mentioned that he was ready to actively participate in the discussions and dialogue and that he looked forwar d to an exchange of views on this matter with 
all the Members present. 
109.  The representative of Australia felt that he had gained most from hearing about the policy-
settings and the decisions by industries which unlock the growth potential in textiles.  
110.  In light of the comments raised by the US, he suggested that Members should consider 
whether current categories and labels were flexible enough to fully serve any negotiations. He thought that the questions were complicated and difficult, and that there were definite challenges 
for Members to ponder. He invited Members to thin k, for example, on the possible utility of the 
definitions of SVEs offered in document TN/MA/W/103/Rev.3 of the NAMA negotiating texts. He asked whether examining a Member's export share in non-agricultural goods 16 years ago was an approach Members wanted to use in 2016, and whether it was an approach that Members would 
still wish to use in 2026.  
111.  He noted that the definition of SVE offered in document TN/AG/W/4/Rev.4 of the agricultural 
negotiating texts was slightly broader and three years more current, but brought with it many of 
the same issues. He asked whether a snapshot of the Members' Goods trade in a five-year period 
over a decade ago was likely to remain indicative in perpetuity. He further asked whether a useful metric could completely ignore services, which were increasingly important to many Members' 
export profiles. 
112.  He invited Members to consider whether other, more flexible and reactive, approaches to 
designation would prove useful in any negotiations going forward. He noted that Members had committed to accord additional consideration to SVEs, but he asked whether size and vulnerability 
might be considered through a context-specific lens. 
113.  He asked Members to consider the questions implicit in any discussion of categorization –
whether it should be broad, narrow, fixed or  dynamic. He wondered whether the current 
definitions were increasing the negotiating strength of developing Members or doing smaller 
Members a disservice by keeping them in the same "weight class" as some of the world’s largest 
exporters and highest GDP per capita players. He l ooked forward to hearing the views of Members.  
114.  The Chairman reiterated that Members would need to develop a common understanding, 
which would be a process in itself.  
115.  The representative of the European Union recalled some of the principles that the EU was 
guided by in trade and development policy. She noted that the EU supported special and 
differential treatment, as well as the provision of technical assistance, focusing on LDCs and other WT/COMTD/SE/M/31 
 
- 16 - 
 
  developing countries, which were in similar situations or most in need. This could be reflected in 
the EU's trade and development instruments, in pa rticular the GSP and the Aid for Trade that the 
EU provided. She believed that in order for the weaker Members in the WTO to be able to make the best use of these instruments, larger de veloping Members should also assume growing 
responsibility in the global trading system in accordance with their economic weight. She 
suggested that the challenge of how to best calibrate commitments of different Members or different categories of Members in future negotiations should probably be addressed on an 
issue-by-issue basis, which would allow Members to capture as accurately as possible the specific 
needs of the more vulnerable WTO Members in each specific area. She noted that the EU stood ready to engage constructively on this issue in any future discussions. 
116.  The representative of Guatemala, on behalf of the SVEs, took note of the remarks. She 
indicated that the SVEs would continue to work in this Committee in accordance with the Work 
Programme approved by Ministers. She felt th at the Committee on Trade and Development (CTD) 
Dedicated Session on Small Economies was not the appropriate forum in which these issues should 
be posed or discussed. 
117.  The representative of Nicaragua associated he rself with the statement made by Guatemala, 
on behalf of the SVEs. She felt that the discussi ons on the difficulties and opportunities of SVEs 
being included in the GVCs should proceed within the CTD's Dedicated Session under the 
responsibility of the General Council. 
118.  The representative of El Salvador associated himself with the statement made by 
Guatemala, on behalf of the SVEs. This Committee, in accordance with the mandate and decisions 
of Ministers, was designed to help identify an d meet the needs of the SVEs, and bolster their 
inclusion in the GVCs. He said that in the various fora of this organization, the SVE Group had always tried to be constructive and proactive. El Salvador associated itself with Guatemala and 
Nicaragua in that they did not consider this the appropriate forum to take up these discussions. 
119.  The representative of Panama echoed the statements made by the preceding speakers. 
120.  The representative of  Cuba supported the statement made by the Group on behalf of the 
SVEs. He considered that the Work Programme fo r SVEs was quite comprehensive, especially in 
regard to formulating responses for the better integration of SVEs into the global trading system. 
121.  The representative of Honduras associated hi mself with the statement made by Guatemala 
on behalf of the SVEs. 
122.  The representative of South Africa aligned his statement with those made by Guatemala, 
Nicaragua, El Salvador, Cuba and others in reiter ating the fact that the regular session of the CTD 
was not a negotiating forum. He believed the statement introduced by the US referred to 
negotiating text, which was not what the Ministers intended. In this regard, he believed that the 
current meeting was not the appropriate forum to discuss this particular topic. 
123.  The representative of India supported the statement made by Guatemala and other SVEs, as 
well as South Africa. He indicated that no definition or criteria or sub-categorization of developing 
countries was required and that Members would need to address particular situations of different Members as required during the negotiations without creating any sub-categories. 
124.  The representative of China supported the statement made by Guatemala and other SVE 
Members as well as by South Africa and India. He reiterated China's commitments to the decision 
on Small Economies at MC10. His delegation was willing to work closely with Members to support the integration of small economies into the multilateral trading system. He felt that it was 
important to highlight that the Doha, Hong Kong and Nairobi Ministerial Declarations had all 
explicitly stated that work on small economies should not create sub-categories of WTO Members. In this regard, he believed that the regular sessi on of the CTD was not an appropriate forum to 
discuss the definition of the small economies. 
125.  The representative of Chinese Taipei echoed th e statement made by Guatemala on behalf of 
the SVEs. WT/COMTD/SE/M/31 
 
- 17 - 
 
  126.  The Chairman said that the Committee took note of all the comments made. 
D. OTHER BUSINESS 
127.  No matter was raised under "Other Business". 
128.  The meeting was adjourned. 
__________