Ajustes Propuestos del Relé General Eléctric SR

The LDCs face many barriers to increasing their share of trade, and ultimately for con- verting the potential benefits of trade into sustainable human development. Some relate to ‘supply-side’ constraints within countries — on infrastructure, institutions and capacity. But many barriers are due to the policy choices of the international community, in terms of limits to market access or domestic producer support that unfairly undermine developing country producers. LDCs face adverse trading condi- tions that are biased against the products in which they have — or potentially have — a comparative advantage.

The sections below describe how developing countries and LDCs face barriers to their increased participation in the global trading system — covering tariff and non- tariff barriers, OECD subsidies, and the ability to represent themselves effectively in rules-setting forums.

Tariff barriers

Average tariffs applied by the OECD to developing country products are often consider- ably higher than those applied to other developed countries. Although border protec- tion, including tariff and non-tariff measures, has declined substantially over the past three decades, it remains significant particularly in areas of agriculture and labour- intensive industrial products where developing countries have a comparative advan- tage.58_{Average agricultural tariffs are close to 10 percent in Canada and the United} States, rising to more than 20 percent in the EU and Japan — barriers which when taken together are estimated to cost the LDCs the equivalent of $2.5 billion in potential export earnings per year.59

LDCs also face significant tariff escalation. Despite the marked growth in output of processed agricultural products in the LDCs over the past 20 years, their global mar- ket share declined from 2.3 percent in 1981-1990 to 1.8 percent in 1991-2000.60 _Tariff escalation is particularly prevalent in tropical raw products of interest to LDCs such as coffee, tea, meat, hides and skins, fruits, cocoa and sugar.

Even after the removal of MFA quotas, tariffs on textile and clothing exports will remain as high as 12 percent (three times higher than the average tariff on industrial goods). Many LDCs such as Lesotho and Madagascar that lost preferential access to the US and EU markets face higher competition and are concerned about job losses in the sector and declining export revenue.

Non-tariff barriers

Forty percent of LDC exports face substantial non-tariff barriers (NTBs) including import quotas and licensing, domestic content requirements, sanitary and phytosan-

_______________________ 58. IMF and World Bank, 2001. 59. Oxfam, 2002, page 100.

itary (SPS) requirements, customs procedures in developed country markets, and contingency measures.61_{According to UNCTAD, these NTBs doubled in the period} 1994-2004, and there has been a sevenfold increase in testing and certification requirements since the conclusion of the Uruguay Round.62_{Some countries see the} opportunity to gain greater market access by improving product standards. Rwanda is investing in improving its share of higher volume ‘fully washed coffee’ — for exam- ple, less than 7 percent of Rwandan coffee is ‘fully washed’ and such coffee can attract a higher market price of $3.18 per pound compared with the lower price for unwashed coffee of $1.96. However, the marked increase in the use of NTBs in recent years has often placed costly and unnecessary burdens on firms which struggle to meet technical, health or administrative requirements for their exports. Furthermore, LDCs are often not included or cannot participate effectively in the various interna- tional standard-setting processes.

OECD subsidies

Developing country and LDC products also compete with production and export support given to producers in rich countries. OECD agricultural subsidies increased in absolute terms from an average of $305 billion in 1986-1988 to $378 billion in 2004, exceeding the total income of 1.2 billion people living below the dollar-a-day poverty line.63_{The hidden cost of this agricultural support falls disproportionately on} the LDCs, whose consumers spend more on agricultural produce as a proportion of their income, while the benefits go mostly to a small number of farmers in developed countries. For example, in 2004, seven of Britain’s richest men collectively earned

BANGLADESH: Garment manufacturing

Bangladesh’s ready-made garment (RMG) sector accounts for over 76 percent of total export earnings and employs approximately two million workers, many of whom are poor women. The United States (US) is the destination market for 42 percent of RMG exports from Bangladesh, yet clothing is excluded from the GSP. In 2006, the total duties paid by Bangladeshi exporters in the US market (nearly $500 million) were more than six times higher than total US bilateral aid to Bangladesh ($77 million). Similarly, due to rigid ROO rules in Europe, only about 16 percent of woven exports can avail DFQF preferences in the EU market. Com- plete DFQF market access for LDCs would help to stimulate RMG exports from Bangladesh, as well as provide opportunities for export diversification.

Source: UNDP Bangladesh Country Office

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61. For example, antidumping, countervailing and safeguard measures. For further information see UNC- TAD, Methodologies, Classifications, Quantifications and Development Impacts of Non-Tariff Barriers

(TD/B/COM.1/EM.27/2). 62. UNCTAD, LDCs Report 2004.

over $4 million64_{a year in farm payouts from the EU.}65 _{While most LDCs are net food} importers and thus may not gain from further agricultural trade liberalization in the short term, because the removal of OECD subsidies would lead to higher world prices of basic foodstuffs, the WTO has already agreed to a revolving fund to assist affected countries. Moreover, such subsidies provide a disincentive for LDCs to invest in food production which could reduce their import dependency in the medium to long term.

LDC representation in trade forums

While the share of developing country and LDC trade is largely determined by a country’s ability to produce high quality goods and services and bring them competitively to international markets, market share is also affected by their ability to negotiate and represent themselves in are- nas where the rules for international, regional or bilateral trade are set.

The WTO is the multilateral forum in which all member countries participate to maximize their share of trade, and the benefits they derive from trade. As of 27 July 2007, with Tonga’s accession to the WTO, there were 151 members of the WTO. Thirty-two of the current fifty LDCs are WTO mem- bers. Eight LDCs are in the process of WTO accession and two are WTO Observers.66_{Nevertheless, despite the efforts} of the LDCs and their increasing coordination as a group, they continue to remain the most marginalized from WTO decision-making processes. Decisions are made through consensus, which means that the LDCs are often the most vulnerable to pressures from larger trading partners. Moreover, decisions are also often made through non-transpar- ent methods such as informal and unrecorded meetings involving only some members. LDCs also face difficulties in engaging properly in the WTO dispute settlement mecha- nism, often due to a lack of adequate litigation capacity. Acceding LDCs also often undertake commitments which exceed those of current WTO members, particularly in the area of market access, forfeiting their right to S&DT that is LDC-specific.67

The gradually expanding and overloaded agenda of the WTO also has serious implications for overstretched LDC missions in Geneva since they are unable to par- ticipate in all scheduled meetings. Nine LDC members of the WTO have no represen- tation in Geneva.68_{Constraints on participation in the WTO decision-making process} include weak institutional and human capacity and limited access to technical expertise and financial support.

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64. Subsidy calculations are based on average payments per hectare under arable crops, taking into account reductions under modulation.

65. Oxfam International, 2004. 66. www.wto.org.

67. UNCTAD, Trade and Development Report 2006. 68. www.aitic.org.

Despite the efforts of