WTO Aid For Trade Review Looks At LDCs And Value Chains

Trade, development and value chains were a subject of discussion at this week’s World Trade Organization 4th Global Review of Aid for Trade, an initiative that encourages developing country governments and donors to recognise the role that trade can play in development.

The discussion on 8 July recognised the problem that least developed countries (LDCs) are not engaged enough in trade on the international scale, and the panellists discussed how to connect LDCs to global value chains, chains of supply of goods or services that operate internationally.

The session centred on how countries locked at the bottom of the value chain can move up. All of the speakers stressed the need to get around obstacles that prevent LDCs from engaging in the global market.

Suggestions about how LDCs could be connected to value chains were made by Patrick Low, chief economist at the WTO, Fonotoe Nuafesili Pierre Lauofo, deputy prime minister and minister for trade of Samoa, and Taffere Tesfachew from the United Nations Conference on Trade and Development (UNCTAD).

Low spoke of the need to get around domestic and foreign constraints to accessing value chains. He argued that a crucial method of battling domestic constraints is crucial to develop good infrastructure and engage in good governance. Key criteria for this, he suggested, are having good social and foreign investment, as well as good trade.

Lauofo, echoing Low, suggested that a crucial step towards connecting LDCs to global value chains is to engage in good governance. He stressed that this is a critical factor to pushing forward economic growth.

Tesfachew argued that there was a real need to strengthen the private sector. He said this could be done by producing competitive firms that export goods of high quality and of high standing on the international market.

Ethiopian Ambassador to the UN Minelik Alemu Getahun detailed some of the ways in which his country has made progress towards the goal of connecting to value chains. He spoke of the double digit growth which has taken place over the last ten years and of the ways in which the nation intends to maintain this trend.

Minelik mentioned the examples of encouraging agribusiness and large-scale farming, as well as using IP rights more effectively. He outlined how Ethiopia had entered into a negotiation with various foreign firms, such as US coffee chain Starbucks, which had registered and were selling Ethiopian coffee as brands in several countries without attributing the origins of the coffee. Ethiopia engaged in negotiations with these companies to get recognition for the coffee through trademarks. He said that this had been beneficial in terms of exports as well as in terms of international exposure to the country.

Another focus of the discussion was South-South co-operation as an important means of implementing Aid for Trade. Minelik outlined to Intellectual Property Watch after the discussion how this is happening in Ethiopia thanks to investments from China, as well as from India and Turkey. He stated that South-South co-operation, particularly in the form of Chinese investment, was beneficial since there were few policy conditions attached. He described such co-operation as “win-win”.

A notion commonly expressed in the discussion was that the various areas that need to be addressed in order to connect LDCs to value chains (such as good governance, strong infrastructure, IP, effective competition, and trade) must not be addressed in isolation. Low stressed the need to “not approach these areas in a silo.”

Caitlin McGivern is currently studying at the University of Law in London and will graduate with an LLM in 2014. She previously obtained a Bachelor’s of Arts in Philosophy and Theology from the University of Oxford. She is a summer intern at Intellectual Property Watch. She is of Swiss, Canadian and Irish nationalities.