RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/COMTD/SE/M/10 
4 May 2005 
 
 (05-1842) 
Committee on Trade and Development 
Tenth Dedicated Session  
 
NOTE ON THE MEETING OF 6 APRIL 20051 
 
Chairman:  H.E. Mr. Gomi Tharaka Senadhira (Sri Lanka) 
 
 
A. ADOPTION OF THE AGENDA ........................................................................................................1  
B. WORK PROGRAMME ON SMALL ECONOMIES .............................................................................1  
C. COMMUNICATION FROM A GROUP OF COUNTRIES (WT/COMTD/SE/W/12) ............................3  
D. OTHER BUSINESS ........................................................................................................................6  
 
 
A. ADOPTION OF THE AGENDA  
1. The Chairman  extended a special welcome to the non-resident Members and organizations 
which were participating in the 10th Geneva Week event.  He expr essed the hope that the presence of 
the non-resident Members could be taken advantage of  in order to make further progress on the work 
on small economies.  He pointed out that the Work Programme on Small Economies was especially important to non-resident Members, as many of them considered themselves to be small and 
vulnerable economies.   
2. He said that the draft agenda for the meeting was contained in Airgram WTO/AIR/2533 of  
18 March 2005. 
3. The agenda was adopted
. 
B. WORK PROGRAMME ON SMALL ECONOMIES  
4. The Chairman  summarized the work that had been done  since the last Geneva Week.  He said 
that the first meeting of the Dedicated Session following the meeting held on 3 November 2004 in conjunction with the previous Geneva Week was held on 21 February 2005.  That meeting was 
conducted in both formal and info rmal mode and focused on two main points.  The first point 
concerned the three step approach for advanci ng the Work Programme on Small Economies.  The 
three steps were:  
 1) to consider the use of characteristics to identify what could be accepted as small, 
vulnerable economies – without naming any group of countries
;  
 2) to consider the trade-related problems wh ich could reasonably be attributed to those 
characteristics – without naming any group of countries ;  and  
 3) to frame responses to those trade-related problems – without naming any group of 
countries . 
                                                      
1 The meeting was concluded on 12 April 2005. WT/COMTD/SE/M/10 
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 5. He said that there were some differences in views about the order in which the three steps 
should be addressed – that is, whether to start with one, then go to two, and then go to three, or 
whether to start with one and two together before going to three.  He said that on the whole Members 
appeared to prefer an approach which addressed one  and two together followed by three at a later 
stage.   
6. The second point which was discussed at that meeting concerned a new proposal by a group 
of countries – islands and landloc ked nations – and which provided an indicative list of specific 
characteristics and problems.  The proposal was contained in document WT/COMTD/SE/W/12, and would be discussed under the next agenda item.   
7. The Chairman said that in addition to the meeting of 21 February 2005, the Dedicated Session 
had also held two informal meetings, one on 25 Ja nuary 2005 and the other on 11 March 2005.  These 
meetings were held mainly to prepare for the prese nt formal meeting. He said that at the previous 
meeting there seemed to be a widespread opinion  that the Dedicated Session needed to deliver 
concrete responses to the problems faced by sm all economies at the Ministerial Conference in 
December 2005.  It remained his highest priority to fulfill this mandate and he hoped to be able to 
count on the cooperation and hard work of Members. 
8. He concluded by saying that between now and the Ministerial Conference in December 2005, 
it was his intention to meet frequently in informal  mode, as well as in smaller groups when necessary.  
He suggested that the Dedicated Session would need to have informal meetings at the pace of one a 
month. 
9. It was so decided
. 
10. The representative of Barbados  said that the small economies proponents wished to have an 
additional formal session scheduled in May. 
11. The Chairman  said that in any case his intention had b een to organize an informal meeting in 
May.  Part of that meeting coul d certainly be in formal mode. 
12. It was so decided . 
13. The representative of Mongolia  requested information on how the Secretariat was making 
efforts to involve non-resident Members to a greater extent in the Work Programme on Small 
Economies. 
14. The Chairman  responded that the Secretariat had provided briefings to non-resident Members 
during the Geneva Week.  He also invited Member s, and in particular the proponents of the small 
economies programme, to take advantage of the pr esence of non-resident Members to more actively 
involve them in the work of the Committee. 
15. The representative of Colombia , with regard to the proposal of the Chairman to schedule 
several informal meetings in the coming months, sai d that this was a busy year for meetings.  Small 
delegations in particular would have difficu lty in attending all scheduled meetings.   
16. The Chairman  recognized that the schedules of all de legations would be overloaded in the 
coming months, and said he was fully aware of the constraints faced by small delegations in that 
regard.  He said that all efforts would be made to avoid clashes with  other meetings and to rationalize 
the work of the Committee in Dedicated Session.   WT/COMTD/SE/M/10 
 Page 3 
 
 
 C. COMMUNICATION FROM A GROUP OF COUNTRIES (WT/COMTD/SE/W/12) 
17. The Chairman  recalled that a submission (WT/COMTD/SE/W/12) had been received from a 
group of countries– islands and la ndlocked nations – which provided an indicative list of specific 
characteristics and problems of small economies.  He  said preliminary discussions on the basis of this 
paper had been held at previous meetings.  At the last informal meeting, in response to the comments 
made by Members, he had proposed that for the next meeting of the De dicated Session a three-
pronged approach be used to exam ine the characteristics and problem s.  This approach includes: 
1) Areas where a WTO solution can be found; 
2) Areas where WTO solutions may be availa ble, but need to be combined with 
assistance from other agencies;  and  
3) Areas where a solution lies elsewhere (outside the WTO). 
18. He said that the intent of the categorization was to better organize the issues so that they could 
be discussed in a more manageable way.  He adde d that it should not be seen as a way to split up the 
17 issues that had been presented in WT/COMTD/SE/ W/12, or those identified in previous proposals. 
19. In reference to the proposal WT/COMTD /SE/W/12, the representative of Barbados  made an 
intervention which is reproduced below in its entirety.   
Intervention by Barbados :  
 
"It is the combination  and cumulation  of all seventeen elements that enhance the 
vulnerability of small economies and theref ore it is the combination and cumulation 
of responses that will reduce the vulnerability of those countries.  There are numerous 
cross-linkages between these problems. 
The specific characteristics and problems raised in document WT/COMTD/SE/W/12 
have systemic implications on the capacity of small economies to integrate fully into the global trading system. Solutions to th ese problems should be therefore found in 
the WTO. 
Comments on the indicative list: 
1) Physical isolation, geographical dispersal and distance from the main 
markets.  Many are small island or  landlocked developing countries.  
 This results in difficulties in the tr ade of perishable goods and commodities 
due to lengthier transportation periods.  Th is also makes the attraction of foreign 
direct investment more difficult.  
2) Insignificant participation in the multilateral trading system and a minimal 
share of total world trade. 
 Small economies account for a minimal percentage of wo rld trade.  This lack 
of trade volume results in lack of economies of scale and limited attractiveness for foreign direct investment. 
In addition, the costs of implementi ng WTO agreements, both financially and 
institutionally, are high. WT/COMTD/SE/M/10 
Page 4  
 
 3) Small, fragmented and highly imperfect markets 
 The domestic markets of small economies, as a result of their size and 
physical isolation as well as other economic f actors, tend to be small, fragmented, and 
highly imperfect in terms of, inter alia , the ability of domestic traders to adjust 
quickly to available domestic and forei gn demand and supply patterns, the domestic 
and export-oriented vertical  and horizontal reach of domestic-based supply chains, 
etc.  The difficulties faced by domestic produ cers to quickly adjust  to foreign demand 
and supply patterns are exacerbated by changi ng, unpredictable and costly standards 
imposed by developed countries on products of export interest to small economies 
(e.g. TBT, SPS measures). 
4) In general, very open economies   
 The economic openness of small economies enhance their inability to 
encourage domestic production and make ad justments to foreign competition all the 
more difficult.  
 To try to compensate for their low pr oductivity and supply base, and in view 
of their reliance on the importation of raw materials for their domestic industries and 
agriculture, small economies have tended to a dopt very open trade regimes, leading to 
a great exposure of their domestic industr ies to foreign competition. The relative 
openness of these economies increases their vulnerability to external shock and 
competition from imported products. 
5) Domestic markets with imperfect and highly polarized structures:  either a 
multitude of small and micro enterprises, or cartels/monopolies.  
 Similar issues to those raised with regard to small, fragmented and highly 
imperfect markets are relevant in this context. 
6) Minimal or no export diversification:   concentration of exports on very few 
products (especially commodities, trad itional products and low value added 
goods).   
 This limits export competitiveness to only a few export markets.  This is both 
cause and effect of dependence upon very few export markets, low competitiveness 
and lack of adequate market access opportunities.  These problems are compounded 
by export price volatility. 
7) Low supply of export services   Most small economies do not have or  have only limited capacity to export 
services.  Where some competitive advantage might exist, small economies often face 
market access barriers and in some cases even the imposition of unilateral standards. 
8) Dependent upon very few export markets   Similar issues to those raised w ith regard to minimal or no export 
diversification are relevant in this context.  WT/COMTD/SE/M/10 
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 9) Inadequate Infrastructure 
 In view of the resource constraints caused by size, small economies tend to 
have low levels of the infrastructure and capacity necessary to build sustainable 
economies capable of competing effectively on wo rld markets.  It is notable that this 
limited infrastructural and institutional capac ity is prevalent in both the public and 
private sectors. 
10) High degree of vulnerability   Small economies suffer from a lack of  resilience when confronted with 
external (or internal) shocks and face acut e difficulties in adjustment.  The economic, 
physical infrastructure and human impact of natural disasters, such as typhoons or 
hurricanes, earthquakes, tsunamis, drought, floods, desertification, etc. are often 
significantly higher and take much longer to recover from in small economies as 
compared to other larger economies.  Damage to small economies' domestic production facilities, including those produc ing export goods, as a result of natural 
disasters often result in drastically reduced  levels of exportation and hence export 
competitiveness on the part of small economies.   The trade-related impact of natural 
disasters was highlighted recently in the WTO Director-General’s response to the 
Asian tsunami. 
11) Low competitiveness   This is exacerbated by a lack of natu ral resources and the consequent need to 
import inputs for production, which in turn renders exports very costly. 
12) Low levels of productivity and insufficient supply 
 The manufacturing and agricultural production bases of small economies tend 
to be limited and their internal supply of agricultural or manufacturing inputs also tends to be limited, leading to a high re liance on the importation of raw materials.  
There is a clear link in this regard to  the problems of low competitiveness and 
reduced attractiveness to foreign direct investment. 
13) Economic rigidity with high adjustment costs    The domestic economic structures of small economies make it difficult for 
them to immediately and flexibly adjust to  changes in external trading and economic 
conditions.  Adjustment costs tend to be  high and with add-on negative impacts on 
other sectors of the domestic economy.  These adjustment costs are exacerbated by 
the lack of financial and institutional cap acity. The relative higher adjustment costs 
faced by small economies require relativ ely higher financial and institutional 
capacities and also put these economies at  disadvantage when negotiating new 
disciplines and commitments in the WTO. 
14) Unable to sustain diversified productions 
 Small economies are unable to diversify, or have great difficulties doing so, 
because of their low productivity and supply base, smallness and lack of attractiveness for foreign direct investment.  The lack of economies of scale, which is 
inherent to a small economy, is also a relevant factor. WT/COMTD/SE/M/10 
Page 6  
 
 15) Considerable difficulties to attract foreign investment 
 The small size of the domestic market of small economies, combined with 
their geographical isolation and dispersal ofte n fails to attract durable and sustainable 
foreign investment, especially in manufactur ing and other productive sectors of the 
economy.  Potential investors equate small economic size with small returns on their 
investment. 
16) Lack of adequate market access opportunities to place their few export 
products   
 Many countries maintain market access limitations that effectively restrict 
small economies to exporting only a few goods which are usually lower value-added.  
The few sectors or products in which sm all economies have developed a higher 
relative level of competitiveness are trad itionally highly protec ted in developed 
countries (e.g. textiles and clothing and some agricultural products).  Onerous rules of 
origin also pose problems which compound the lack of adequate market access opportunities for small economies to place their few export products.   
17) High transport and transit costs 
 These exacerbate the problems associ ated with physical isolation, 
geographical dispersal and distance from ma in markets, and further decrease the 
export competitiveness of small economies." 
20. The Chairman
 proposed that the meeting switch to in formal mode in order to continue the 
discussion of the "basket" of characteristics and problems.   
21. The meeting moved to informal  mode and focused on the first four characteristics and 
problems.  The meeting addressed the remaining 13 items on the indicative list at its informal session on 12 April 2005.  
22. In resuming the meeting in formal mode, the Chairman
 stressed the importance of the 
discussions that had taken place.  He also stressed more generally the importance of the Work 
Programme on Small Economies for those Memb ers with small and vulnerable economies.  
D. OTHER BUSINESS  
23. The Chairman  said that he would organize a number of informal meetings in the coming 
weeks.  His intention was to comp lete the ongoing discussion and then  move on to the next phase of 
the work, which was to look for solutions.  He sai d another formal session would most likely be held 
in the latter half of May.  He stressed the impor tance of moving on quickly to the solutions phase so 
that the Committee in Dedicated Session would be in  a position to deliver conc rete results in time for 
the Ministerial Conference in December 2005, which would be held in Hong Kong, China.  
 
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