Ulaanbaatar, 30 August 2007

United Nations Under-Secretary General Cheick Sidi Diarra on Thursday urged landlocked developing countries to drastic measures on trade facilitation, to overcome huge disadvantages to their economies because of poor access to world markets.

“Landlocked and transit developing countries must aggressively pursue to implement bold trade facilitation measures,” Diarra told representatives of landlocked developing countries and transit countries gathering to discuss trade in Ulaanbaatar, Mongolia.

“Trade facilitation measures do not require enormous capital unlike infrastructure…but strong political commitment for bold reform and liberalization is a must,” he said.

Exhaustive procedural requirements, documentation and contracts have a negative impact on external trade performance in landlocked developing countries, whose economies develop slower than other developing countries, he said.

A World Bank estimate put costs per each additional day of transport delays because of customs and pre-arrival documents processing at 0.5 percent of the cargo value for goods transported by rail or ship from developing landlocked countries, while their exports took between 52 to 65 days, compared with 30 to 39 days by countries with coastal access.

“These statistics illustrate the magnitude of the impact of cumbersome procedures on the external trade performance…and economic development of landlocked developing countries.”

International trade analysts have said landlocked developing countries – a total of 31 countries mainly in Africa and Asia – experience an average one percent slower growth than coastal economies merely because of their geographical isolation and high transportation costs.

Research has also shown that improving the infrastructure of the landlocked developing countries and transit countries could increase the trade volume with about 11 percent.

In addition to efforts by the landlocked developing countries to improve their own physical and non-physical environment for trade, international rule-makers and donors should accept these countries’ need for special treatment, in order to reach the level of growth and competitiveness other countries with better access to sea enjoy.

“The international community should act urgently to ensure better market access for goods from landlocked developing countries, and to establish necessary mechanisms and provide much-needed technical assistance to boost exports from these countries,” Diarra said.

“Even duty free market access should be considered as an option,” he said.

Diarra said landlocked developing countries should strengthen their negotiating capacity at the World Trade Organization (WTO), and international donors should give a greater priority and support to initiatives aimed at improving trade facilitation in those countries.

“The WTO and other relevant organizations should extend all the necessary technical assistance to landlocked developing countries on a priority basis to strengthen their negotiating capacities,” Diarra said.

Landlocked developing countries remain marginalized, nine of the 31 countries being still outside the WTO. The trade of the bulk of countries remains miniscule, accounting for only 0.76 percent of the total exports in the world, and 0.74 percent of the total imports of world merchandise in 2006.

“This group of countries faces many challenges, with regard to involvement in international trade due to their geographical location and lack of access to sea,” said Mongolia’s Prime Minister Miyeegombogiin Enkhbold.

Trade facilitation was of “vital importance” for the landlocked developing countries, to increase their trade and competitiveness of their products in the world market, he said.

Mongolia – a member of WTO with closest access to sea through China’s Tienjin port in a distance of 1,800 km, and Russia’s Vladivostok port some 3,800 km away – spends eight percent of its GDP in transit transport costs, he said.

World Bank surveys have shown Mongolia spends up to three times more for transportation of each container compared to countries at the same level of development, but with access to sea.

Landlocked developing countries needed other countries to recognize their special needs and have preferential treatment for their trade of goods.

“We believe that…providing special and preferential treatment in transportation of landlocked developing countries’ exported and imported products will be a step forward in encouraging fair competition,” Enkhbold said.

“Working in close collaboration in this field will ensure the (landlocked developing) countries’ economic development,” he said.

Delegations of the landlocked developing countries and transit countries are discussing a unified approach in the DOHA round and other WTO negotiations, to achieve beneficial treatment and position in the global market.