UK pledges US$21.3 million to EIF, as high-level trade officials at WTO Ministerial Conference call for urgent action for leveraging trade to combat poverty, inequality

With trade gap topping US$92 billion for least developed nations, ministers from world’s poorest nations cite evidence of success with trade as development solution; push for entry into global markets

BUENOS AIRES (December 12, 2017) – In the face of a US$93-billion trade deficit — much of it due to a drop in commodity prices — trade officials from some of the world's poorest nations today joined donor governments at the World Trade Organization Ministerial Conference in calling for greater support for connecting the least developed economies to export markets. 

“Least developed countries account for 13 percent of the world’s population, but engage in less than one percent of global trade,” said Pan Sorasak, Minister of Commerce, Royal Government of Cambodia, speaking at a press briefing early today. “We have a long way to go, but we have evidence that trade can serve as an engine for developing sustainably. It is time to invest in this promise of a better life for our poorest and most vulnerable citizens.”

Yesterday (December 11), in a significant show of support for trade as a development solution, the UK government announced at the WTO conference a commitment of £16 million (around US$21.3 million) to 51 of the world’s poorest countries. Channelled through an innovative global trade programme known as the Enhanced Integrated Framework (EIF), the funds will help the least developed countries (LDCs) develop the tools, skills and economic capacity they need to become competitive in targeting new markets for their goods and services.

“Trade and economic development is clearly the most effective way for countries to create investment and jobs," said Greg Hands, Minister of State for Trade Policy, Department for International Trade, UK. "I’m delighted that the UK’s generous support to the Enhanced Integrated Framework will help the world’s poorest countries trade out of poverty.”

WTO Director General Roberto Azevêdo cited EIF’s progress with helping LDCs improve production and create jobs by producing spices, mangoes, honey, textiles and other products. Several of EIF’s partner countries, which are all in Africa, Asia and the Pacific, have seen a growth in services, such as tourism and information technology. Since 2008, when EIF was created, 51 countries have benefitted from the programme’s interventions; in 2016 alone, EIF supported 189 micro, small and medium-sized enterprises in LDCs around the world.

“The EIF does vital work and has made a real impact on the ground,” the WTO Director General said. “But we are starting from a low base here. There is still a huge amount to be done. We are particularly grateful for the UK's commitment at this time. We see it as recognition that EIF and the countries it partners with are indeed on the right path."

The LDCs face considerable challenges, however. The trade gap in 2016 stood at US$92.9 billion — a nine-fold increase since 2005, and the LDCs’ share of the global market contracted by six percent last year, mostly due to a drop in the price of fuels and mining products, according to the Director General. 

EIF Executive Director Ratnakar Adhikari said the funding commitments and pledges made at the Ministerial Conference and in the coming year will help LDCs ready themselves for paradigm shifts in the global economic system, including the growing trend in E-Commerce. EIF’s work so far has provided the world with success stories, Adhikari added, “But this does not mean that the work is done. Rather, it is a reminder of how important this work is—and how much more focus it deserves.”

Addressing remaining bottlenecks for LDCs

 At the WTO meeting yesterday, Ministers of LDCs issued a statement (http://bit.ly/2jQapyY) urging EIF donors to continue to support the programme, for its “substantial contribution" toward building the capacity of poor nations to gain entry into the global trading system.

Developed countries have granted LDCs non-reciprocal tariff exemptions to help spur the development of export-oriented sectors, giving LDCs a chance to compete in their markets. In 2015, the international trading community granted the poorest countries duty-free market access on 65% of tariff lines, confirming the commitment of WTO member countries to granting them preferential treatment. But according to the authors of the LDC Ministerial Declaration, this does not always translate into action. 

“The Enhanced Integrated Framework provides crucial support for tackling such supply side challenges,” said Minister Pan Sorasak of Cambodia. “EIF acts as an honest broker between LDCs and other nations that wish to contribute to trade-based economic growth and development.”

Also, some countries are not capable of producing goods and services in sufficient volumes, consistency or quality to be able to take advantage of export-led economic growth.

An evaluation of EIF’s progress suggests that a number of LDCs continue to adopt measures that will allow them to become more fully integrated into regional and even global trading systems. “This is being seen in mango and gum Arabic production in Mali; sesame in Burkina Faso; cashews in The Gambia; mushrooms in Lesotho, honey in Zambia and Yemen, and coffee in Burundi,” said Adhikari. “Some countries, including Liberia, Zambia and Burundi, already have seen improvements in their business environment.”^[1]

EIF countries such as Cambodia have found success through streamlining systems to benefit their labor-intensive manufacturing sector. Other countries, such as Vanuatu, one of the EIF’s recent success stories, have demonstrated the power of tourism and travel exports in LDC development.^[2]

The number of international tourists traveling to LDCs has multiplied, rising from over 10 million in 2005 to more than 28 million in 2015, according to the WTO report for 2017, Market access for products and services of export interest to least developed countries.^[3] With the influx of foreign tourists and the increase in their purchase of goods and services, LDCs have seen a jump in travel revenue, which reached US$17 billion in 2016, compared with US$5 billion in 2005.

“Despite the ongoing challenges, some countries are beginning to see results, which gives everyone hope,” Cambodia’s Pan Sorasak said. “Over the last decade, the WTO and its partners in the EIF have pivoted to try to ensure that trade specifically benefits the LDCs. Cambodia would not have been able to come this far without this new focus on Aid for Trade. We have been given a fishing rod that allows us to feed ourselves, rather than a fish that would feed us once.”

The EIF is funded by 24 donor countries, whose contributions are administrated by the EIF Trust Fund. Since 2008, the EIF has invested more than US$220 million to help LDCs strengthen their trade capacities. In addition to the UK funding announced yesterday, EIF will secure an additional US$160 million to help 47 LDCs and 4 recently graduated countries reach their export goals.

“We will use all tools available to promote growth, development, job creation and inclusivity," Director General Azevêdo said. "Fostering this greater inclusivity is undoubtedly one of the most pressing challenges of our age. The solutions are not always evident. But we cannot shy away from this discussion and we cannot make believe it does not exist.”^[4]

###

Interview opportunities: 

Ratnakar Adhikari, Executive Director, Executive Secretariat for the EIF

Annette Ssemuwemba, Deputy Executive Director, Executive Secretariat for the EIF

For more information, or to arrange interviews, contact:

Violeta Gonzalez, Outreach and Fundraising Coordinator, Executive Secretariat for the EIF, violeta.gonzalez@wto.org

Lynsey Grosfield, Managing Editor (Consultant), Trade for Development News, lynsey.grosfield@wto.org

About the Enhanced Integrated Framework (EIF):

The Enhanced Integrated Framework (EIF) brings together partners and resources to support the Least Developed Countries (LDCs) in using trade for poverty reduction, inclusive growth and sustainable development. The EIF is a global partnership between LDCs, donors and international agencies, underpinned by a multi-donor trust fund, which provides financial and technical support to build trade capacity in 47 LDCs and 4 recently graduated countries. The EIF is the only global Aid for Trade programme exclusively designed for LDCs and therefore is uniquely placed to assist countries to develop sustainable trade strategies. Through a multilateral approach, the EIF ensures a coordinated, transparent and efficient delivery of Aid for Trade.