3 July 2018

Five questions to Least Developed Country governments about inclusive trade

by ICTSD / in Q&A

Bridges Africa and Passerelles discussed trade and sustainable development with Fatoumata Jallow-Tambajang, Vice President of The Gambia, Kamrang Tekreth, Secretary of State at the Ministry of Commerce of Cambodia, and Hassan Come, Minister of Commerce and Industry of the Central African Republic (CAR).

This conversation took place at the Enhanced Integrated Framework (EIF) Global Forum on Inclusive Trade for Least Developed Countries (LDCs) held on 13–14 June at the World Trade Organization (WTO), Geneva. A call to action was released at the forum appealing for increased support from the international community so that LDCs can implement a trade agenda conducive to sustainable economic growth.

Bridges Africa: The integration of most LDCs into the global trading system remains an elusive goal as their combined share of global trade has decreased and remains below one percent. What are the main barriers to the sustained participation of LDCs in international trade?

Kamrang Tekreth (Cambodia): Countries are confronted with diverse situations, different levels of development. But if we look at common challenges, the main barrier for LDCs is productive capacity: the ability to produce more in a cost-effective way. This low level of productivity and other supply side constraints are the reason why LDCs contribute so little to global exports. This is why capacity building is so important, including to address gaps in human capital and hard and soft infrastructure.

Hassan Come (CAR): There are many barriers, all of which are impossible to mention here. They include deficiencies in basic infrastructure – namely energy, roads, and telecommunications; low productive capacity; an underdeveloped entrepreneurial culture; a shortage of professional qualifications; and the absence of standards and quality assurance systems. All of these factors limit our countries’ ability to take part in international trade in a beneficial way.

Fatoumata Jallow-Tambajang (The Gambia): Developing countries operate in different contexts. Some are emerging economies while others may be afflicted by conflict, political instability, or man-made disasters. Nevertheless, economic opportunities in LDCs are constrained by obstacles such as poor infrastructure and often limited opportunities for value addition, as many LDCs still mostly export raw products and import processed and final goods. It is important to look at these issues. For developing countries to better integrate through trade there is a need for a bottom-up approach that supports LDCs in overcoming such challenges so that they can benefit from equal economic opportunities and move towards graduation.

Bridges Africa: The theme of the EIF global forum has been inclusive trade for LDCs. What does inclusive trade mean and what policies or measures can be designed to make this notion of inclusiveness a reality on the ground?

Kamrang Tekreth: When talking about inclusiveness, we are talking about the benefits of trade and growth – not only for developed countries but also developing countries and LDCs. And within each country inclusiveness is about ensuring that everyone – not just the rich but also the poor, women, and youth – can benefit from increased trade and economic development. To make trade more inclusive we need to develop human capital, invest in infrastructure, and take advantage of innovation and technology. It is also important to create a robust trading system that better serves the needs of LDCs and developing countries. The international community needs to support LDCs in their efforts to bridge the development gap.

In Cambodia, almost 80 percent of SMEs [small and medium-sized enterprises] are owned by women. So women are important economic actors and they help create jobs. But it can sometimes be difficult for them to make their voices heard, especially as many of these SMEs are informal. How can we support them? We have implemented a government-led SME support strategy – not exclusively focused on women – that concentrates on building capacity and mobilising resources from the private sector and NGOs. It helps provide women with the required skills, including entrepreneurial skills, so that they can make their businesses more profitable and gain access to finance, which is often the main challenge confronted by women.

Regarding youth, it is important to start supporting them in the earlier stages of life, from primary and secondary school. This is key to tackling the challenges of human capital formation and skill gaps. In Cambodia we have introduced reforms to our education system in order to catch up with evolutions in science and technology. And our government has devised a development strategy for the 2015–2025 period in which we address our technical knowledge and skills base in order to enable a shift to skilled labour and higher productivity in various sectors of the economy.

Hassan Come: The concept of inclusive trade involves the idea of solidarity and fairness, both on a national and international level. Internally, inclusive trade calls for all social categories to be involved in commercial activities, with particular attention paid to women, youth, and other vulnerable groups. With this in mind, governments need to introduce projects and programmes focused on capacity building for young people and women into their trade strategies and policies. On an international level, the concept of inclusive trade refers to the need to consider the trade interests and priorities of LDCs. Improving the position of our countries in the global economy depends first on LDCs themselves and then on the solidarity shown by the international community.

Fatoumata Jallow-Tambajang: Inclusiveness means bringing people on board in the development process, the goal of which is to ensure their well-being. Hence people should be at the forefront in every domain, including trade. In The Gambia, many producers are young people and women operating predominantly in the informal sector. They are often incapable of leveraging the full potential of their businesses because of capacity limitations. So inclusive trade should be people-centred and about providing opportunities. To reach this objective, it is necessary to mobilise domestic resources, build local capacities, and improve market information and connectivity. Connectivity is particularly important as it can facilitate digital trade and enable participation in global, regional, and domestic markets.

Bridges Africa: What complementary policies are necessary for LDCs to realise the opportunities of participation in international trade and achieve sustainable development objectives? Are there examples of success from your country?

Kamrang Tekreth: Trade is a cross-cutting issue. There has to be a collective effort and concerted policies across government. Trade policy further involves a domestic and an international dimension, be it at the global level with the WTO or at the regional level. In our case this involves ASEAN [Association of Southeast Asian Nations] with the ASEAN Economic Community Blueprint 2025 and the action plan to help members integrate and grow.

In Cambodia, we have an industrial development policy, which is also a trade growth policy. Our ambition is to expand from the handful of products we currently export – garments, agricultural goods, and a few other products – to other manufacturing sectors. This diversification is very important. The industrial development policy also includes support for SMEs and the establishment of special economic zones with the goal of attracting foreign direct investment into the country.

As mentioned, it is also very important for developing countries – and in particular LDCs – to be able to seize the opportunities related to advances in technology and digital trade. We will soon be introducing a law on e-commerce and our telecommunications law has now been in place for three years. Cambodia has a population of 15 million with 20 million mobile phone subscriptions, so we can see the opportunity. It is essential that we invest in providing these people with the necessary infrastructure, skills, and capacities to be able to use this opportunity and expand their economic activities.

Finally, regarding policies already in place at the WTO, we are now working on trade facilitation. This can help attract and retain investors in the country and is important for domestic firms. We have been receiving a lot of assistance from our partners to implement these facilitation policies.

Hassan Come: Trade policies and agreements – as a set of legal instruments – are necessary to ensure transparency and predictability in trade relations. Nowadays, however, other policies on new issues – such as environmental protection, the effective management of resources, the promotion of gender equality, and access to information and communication technologies, among many others – also need to be considered. Countries must establish relevant rules in these areas in order to better leverage the opportunities of international trade. These aspects are important, for example, when it comes to developing sustainable, inclusive value chains for farm goods such as cotton or cocoa.

Fatoumata Jallow-Tambajang: First, we need to build capacities, because it is the quality of our human capital that is the main driver behind trade and development. We need to build effective institutions responsible for trade and investment policymaking and the implementation of reforms that harmonise our policies and bring them in line with international practices. We also need to domesticate and successfully implement the agreements to which we are signatories – including the African Continental Free Trade Area and the WTO’s Trade Facilitation Agreement. To this can be added schemes such as the African Growth and Opportunity Act that grants African LDCs preferential access to the US market.

At the same time, it is crucial that efforts be deployed towards the realisation of the Sustainable Development Goals, in particular those related to poverty reduction, human security, and rights. Democracy should be promoted to provide an enabling environment for development, including through international trade.

Bridges Africa: As a recipient of aid for trade, what do you see as the priority areas for future interventions?

Kamrang Tekreth: During the last decade, Cambodia has indeed greatly benefitted from support provided by the EIF. It has helped us expand our export capacity while also contributing to the empowerment of women. One particular EIF project helped us address the lack of qualified staff – in particular kitchen staff – in the hospitality and tourism sector, which is very dynamic in Cambodia.

Regarding future aid for trade interventions, it will remain important to keep building capacity where it is most needed in both the public and private spheres. More specifically, I would like to emphasise e-commerce and digital trade. We need to move in that direction so that our country can keep up with technological progress. Building on an e-commerce and digital trade assessment, Cambodia has signalled its interest to the EIF for more assistance in this area. Finally, LDCs continue to need support to strengthen their institutions so that they can effectively formulate and implement trade-related policies.

Hassan Come: The priority areas for LDCs remain the same: building basic infrastructure and developing supply-side capabilities. These remain the areas most in need.

Fatoumata Jallow-Tambajang: The first priority remains supply-side constraints. And the appropriate response will be different depending on specific domestic contexts. But in view of some of the similarities across LDCs, including The Gambia, fundamental aspects include investing in infrastructure, enhancing the ability to generate value addition,  and creating opportunities for vulnerable groups such as women and youth. Providers of aid for trade should also look at strengthened cooperation at the regional and sub-regional level, because this integration can give LDCs access to broader markets and maximise the impact of trade support programmes.

Bridges Africa: What are the implications for LDCs of the uncertainties arising from current tensions among major players in the world trading system? What role do you see for the World Trade Organization in this context?

Kamrang Tekreth: As a small country we depend on the global trading system, and we are very concerned about these tensions. Protectionism benefits no one. The WTO plays an important role in promoting fair trade among developed and developing countries, in particular LDCs, and this role should be strengthened. We feel protected by the rules, as they help us engage with the big players. Many countries have voiced similar support at this forum for a strong multilateral rules-based trading system. Challenges arise. But we should see this as an opportunity to work together and overcome these challenges.

Hassan Come: The current tensions among major players in the world trading system are causing trade disruptions and represent a serious threat to LDCs, whose share of international trade is steadily decreasing. In this context, the WTO must fulfil its mission as the regulating body of the multilateral trading system by ensuring that the rules that govern its members are observed. The Central African Republic is currently responsible for coordinating the LDC Group at the WTO, and we would like to take advantage of this opportunity to work together and implement a common strategy in response to this major challenge.

Fatoumata Jallow-Tambajang: In any human endeavour there may be tensions when people do not have the same level of opportunity. But we are fortunate to have an organisation such as the WTO, which can be an arbitrator when disputes occur and also help reconcile emerging tensions. The organisation is still very relevant for the world, and particularly for LDCs. We have a shoulder to lean on when there are crises in our relationships. Multilateralism is essential for LDCs. It is important that we recognise the fundamental role that the WTO is playing, not only in promoting trade but also greater equality between players in the world economy. So I would like to call on all WTO members, including the LDCs, to fulfil their commitments and demonstrate that they are serious about sustaining the organisation.

The WTO offers many possibilities to build human and institutional capital. In The Gambia, for example, we are receiving assistance from the International Trade Centre [a joint cooperation agency of the WTO and UNCTAD] through the SheTrades initiative. As part of the support that ITC is providing we also have a very good Youth Empowerment Project, as well as technical advice where necessary. The Gambia is emerging from a very complex political, economic, and social situation. It is important that we extend our appreciation to all those who are supporting us in our reform and modernisation efforts, including the European Union. Together, we need to develop bankable and sustainable projects that respond to the aspirations of our people and positively impact their lives and livelihoods.

Header image by U.S. Mission Photo/Eric Bridiers
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