Commission on Enterprise, Business Facilitation and Development/ 19-23 February/ YS,LB,LR

Eleventh Session of the Commission on Enterprise, Business Facilitation and Development, Geneva, 19-23 February 2007

Monday 19 February 2007


1. Election of officers

In accordance with rule 18 of the rules of procedure of the Commission of the Trade and Development Board, the Commission elected Sr. Julio Vasquez, Vice Minister of Economics and Plan of Cuba, Chairperson of the Eleventh Session of the Commission on Enterprise, Business Facilitation and Development. Five Vice- Chairperson and a Rapporteur were also elected taking into account the need to ensure equitable geographical distribution.

2. Adoption of the agenda and organisation of work

Since there was no comments from the delegates the agenda (TD/B/COM.3/77) was approved.

The purpose of this meeting was to reflect on ways in which UNCTAD can continue helping developing countries to enhance the competitiveness of their enterprise, in particular small and medium enterprises (SME), as well as find ways to better benefit from participation in international trade and the information economy.

The Director, Mrs. Anh-Nga Tran-Nguyen started speaking about the different topics which are going to be treated in this meeting. The outcome of this meeting could include recommendations to UNCTAD secretariat as well as policy options for consideration by member states.

The first subject to be treated during this session is “Improving competitiveness of SMEs through enhancing productive capacity”. This subject is of great importance for developing countries to take advantage of the opportunities that globalisation offers

The second subject to be discussed is “Efficient transport and trade facilitation to improve participation by developing countries in international trade”. They have a direct impact on the competitiveness of LDCs.

Concerning agenda item 5, on “ICT and e-business for development” the Commission recognized that ICTs have become an important element of development strategies and policies.

Finally, a new feature to the work of the Commission is introduced in this year’s session: “ Building skills in developing countries : Training, networking and ICTs”. This theme is included under item 8 of the agenda.


The Commission will start with Item 8. Under this item, the Commission will consider the outcome of the Ad hoc Expert Meeting on Building Skills in Developing Countries: Training, Networking and ICT.

Item 8 - Other Business

“Building skills and knowledge for trade in developing countries”

1. Introduction by the Secretariat

If developing countries want to derive more efficient and fairer gains from the international economic system they have to support and reinforce the abilities of their knowledge institutions and training providers to produce informed and capable trade professionals.

There are two problems facing developing countries regarding knowledge:

1. The problem of insufficient knowledge and skills for trade in developing countries
2. The fact that investment in the issue of knowledge and skills for trade will not show immediate results. Indeed, measuring the benefits of such investment is difficult and may only have noticeable impacts several years later

There exists a great deal of research and experience on trade-related capacity building not least in UNCTAD. Several declarations and commitments have been made by the international community recognizing the role of capacity building and technical assistance for trade (for e.g.: Doha declaration in 2001, the International Conference on Financing for Development in Monterrey).

The Expert meeting organized in November 2006 concluded that in addition to international organisation (IO) and donor countries contributing to the capacity building programs of developing countries it is developing countries’ governments that have to first see the importance of this issue and commit money to invest in the development of their training and research capacity for trade.

The question is what are the mechanisms by which investment in trade-related knowledge and skills are translated into economic growth and poverty reduction. UNCTAD views these mechanisms from two perspectives: the role of training (strengthening the role of local training institutions) and the role of research (the formulation of successful domestic policies depends on high quality analysis of economics phenomena and data). Research from organisations such as the Overseas Development Institute’s RAPID programme or from the global Development Network are very important.

Regarding UNCTAD’s mandate, aside from individual requests from member states, UNCTAD has been mandated to undertake trade-related capacity building activities in the field of human resources, research and institutional development.

UNCTAD launched the highly successful Virtual Institute on Trade and Development which assist academia in developing countries to strengthen their individual and institutional capacities to teach and research trade and development issues.

Web site : http://vi.unctad.org
Contact : Vlasta Macku , Chief , UNCTAD Virtual Institute, tel: + 41-22-907 62 27 fax: +41-22-907 00 50 ; e-mail: vlasta.macku@unctad.org

The Virtual Institute complement the pre-existing TrainForTrade program (work mainly with trade practitioners as well as with civil servants) and the Paragraph 166 course (on key issue of the international economic agenda, work mainly with policy makers).

Web site TrainForTrade: http://learn.unctad.org ; e-mail: trainfortrade@unctad.org
Web site P166: http://p166.unctad.org; e-mail: p166@unctad.org


2. Report of the Ad Hoc Expert Meeting on “Building Skills in DC : Training, Networking and ICTs.”

This Expert meeting discussed the role of national, regional and international efforts to enhance training and research capacities of developing countries in the field of trade.

The results of this report can be summarised as follows: adaptation and updating of knowledge and skills (all countries need training programmes tailored to their level of development, the capacity-building measures should be adapted to and determined by local conditions. Moreover, there is a need to continually update trade knowledge and skills given the dynamic nature of trade issues) ; balancing foundation education and vocational training (experts stated that there is a need for foundation training on trade issues, trade programmes should be institutionalised at the university level for example) ; creating the conditions for a sustainable research capacity (it is a long-term process, there is a need to strengthen the provision of foundation knowledge on trade issue in BA and master’s programmes) ; linking researchers and their work to the policy making process (the question was to what extend research is demand-driven by Governments and to what extend researchers should identify and shape the research agenda themselves. Moreover, the findings of researchers should be more widely disseminated among the general public. It is also important for researchers to gain the trust of the Government) ; ICTs and networks’ role in training and research programmes (experts discussed the importance of networks, they can be cost-effective as they produce economies of scale, South-South research networks in particular are an efficient response to low level of capacity in developing countries ); measuring the impact of capacity-building efforts (experts underlined the importance of evaluating TRCB-projects with regard to their efficiency, effectiveness and impact. Evaluation mechanisms are important for ensuring quality and further funding are conditional upon successful evaluation and assessment. The effectiveness and impact of long-term capacity-building is not however easily measurable.) ; funding for TRCB (trade related capacity building) and providing aid for trade (the debate on financing has shifted from a position emphasizing “trade not aid” to “aid for trade”. Developing countries need assistance in strengthening their supply capacity to benefit from integration into the world economy. However, there are difficult choices involved in spending money on programmes. Donors also have to prioritise how to distribute their assistance) ; role of IO in trade-related capacity-building (UNCTAD provide a wide perspective on trade issue. UNCTAD should continue to develop training as well as the support for local capacities in this area. UNCTAD should strengthen the dissemination of its work. Several experts called for a follow-up to the expert meeting).

Some comments from member states:

Mauritius underlined the importance of technical assistance and capacity building. UNCTAD has an important role in promoting effective participation of developing countries in trade and so should continue its efforts in the Aid for Trade initiative.

Aid for Trade : www.wto.org

Senegal agrees that this question are of up most importance. Senegal is a member of the virtual institute. Looking back the outcome has been positive. The university of Dakar could benefit from others universities and so enhance its knowledge of trade.


Item 6: Implementation of agreed conclusions and recommendation of the Commission

The UNCTAD Secretariat has prepared a progress report on the implementation of decisions and agreed conclusion adopted at the tenth session of the Commission.

Regarding item 3, “Improving the competitiveness of SME through enhancing productive capacity”, UNCTAD has for example taken action in the field of business linkages in Brazil and Uganda. The main objective of these projects was to promote the creation of durable and mutually beneficial partnership between TNC on the one hand and SME on the other. Moreover, UNCTAD’s important work in entrepreneurship capacity-building, in particular the EMPRETEC programme has been expanded.

EMPRETEC Programme
Site web: www.empretec.net
E-mail: empretec@unctad.org

Regarding item 4 “Efficient transport and trade facilitation to improve participation by DC in international trade”, the Secretariat disseminated information through the annual Review of Maritime Transport. Moreover, UNCTAD’s trust fund on trade facilitation has become a tool to support the work of capital and Geneva-based negotiators. It aims at building capacity to support the effective participation of developing countries in the WTO negotiating process in trade facilitation.

The ASYCUDA Programme continued in 2006 to implement several technical assistance projects (for e.g.: transit corridors, development of trade facilitation platforms). The ASYCUDA Programme has created regional centres. The development of ASYCUDAWorld continued. The system allows customs administrations and traders to handle their transactions via the Internet.
ASYCUDA Programme
Site Web: www.asycuda.org
E-mail: for Asia and Pacific region : renaud@asycuda.org

Regarding item 5, “ICT and E-business for development”, the Secretariat released in November 2006 the Information Economy Report (IER). This report provide the most updated information on the uptake of ICT in developing countries.


Tuesday, 20 February 2007

Second informal meeting
Item 3- Improving competitiveness of SMEs through enhancing productive capacity

“Global Value Chains (GVC) for Building National Productive Capacities”

1. Introduction by the Secretariat

The Commission will focus on how developing country’s SMEs can better integrate global value chains in order to enhance their national productive capacities. Building productive capacities has been identified as an important component of the Aid-for-Trade initiative. By participating in a GVC, developing country’s SMEs can access technology, upgrade skills and improve their competitiveness.

The most important question is how SME can improve their positioning in global value chains and reap benefits. The performance improvement requires changes in the nature and mix of activities carried out. These changes cover process, product, functions and chain upgrading. Process upgrading aims at the introduction of better quality control system or new production equipment. Product upgrading includes the ability to produce components or retail new or more competitive products developed by lead firms (for e.g. : a footwear producer shift from mass produced low-cost shoes to more fashion-intensive footwear sold for higher price). Functional upgrading seeks to increase the value added by changing the mix of activities conducted within the firm or moving the locus of activities to different links in the value chain. Chain upgrading aims at creating opportunities for suppliers that have developed competences and skills to move to a new value chain.

There are several policy measures that facilitate SME’s integration into the global value chain, notably the improvement of the investment climate and the improvement of the supply capacity (as a result of greater TNC capacities and industrial policies aimed at maximising the benefits from FDI, some Asian countries have successfully integrated into GVCs). Building the attractive capacity of a country (encouraging the enterprise sector to be competitive and outward-looking) is very important. Moreover the cluster approach (based on enhancing specialized skills and networking dynamics of firms agglomerations) can help local firms integrate into GVCs. Finally, the public/private partnership is another tool to the establishment of value chain link. In the development of programmes, EMPRETEC centres have proved very useful, acting as focal points in promoting the business linkage concept.
Other: the Japan External Trade Organisation (JETRO ; http://www.jetro.go.jp/) facilitate business linkages and SME’s integration into GVC (for e.g. in Malaysia, Thailand); Regional integration in ASEAN has contributed to the development of regional production networks by TNCs.


Mr. Federico Poli, Deputy Director for Economics Affairs, Iberoamerican Secretariat

SME do face special difficulties in global competing markets regarding their ability to get credits access and to cope with relatively higher R&D costs compared with bigger enterprises. The expert numbers macroeconomic and microeconomic measures to help SMEs. Former would include a monetary policy which aims at targeting inflation, a flexible exchange rate regime, and reduction of public debt and better management of external debt. Other macro policies should be aimed at linking GDP growth with employment creation as well as a banking system with sound risk management in order to avoid financial crises. At the micro level, the author describes two strategies that have emerged from international experience. On the one hand associations between SMEs and TNCs in so called GVC, on the other hand policymaker aim at creating a cluster of SMEs in regional networks. The panellist discusses the example of a program being designed for Latin America that tried to augment corporate social responsibility (CSR) as well as to secure competitiveness of SMEs. The ongoing project sees strict cooperation between Iberian companies in order to analyse possible programs of CSR in South American countries that could enhance SME’s productive capacities. The second step includes a plenary discussion between all stakeholders (ministries for SMEs, SMEs, TNCs with potential CSRs, educational institutes and credit institutions). Finally the secretariat plans an international conference in order to establish “best practices” and to facilitate the communication between the adherents to the program.

Some comments by member States:

Uganda explained its experience with UNCTAD. 6 business linkages between SMEs and TNC were created in several sectors (telecommunications, manufacturing, agro-business, real estate). SMEs have seen their profits multiplied (3 or 6 times). This programme facilitated access to credit for the SMEs. Furthermore, the government enhance road infrastructure.

Krishan Kumar Modi, Chairman, Modi Enterprises, India.

If a country want to grow, the SMEs of a country have to grow. If growth is to be maintained the country has to have proper policy matter. Mr. Modi divided the enterprises in different categories, the help they need depending upon the profile, location and expertise of the entrepreneur.

Franchise SMEs are SMEs created by large companies and that are operational as their supply chain. It is imperative for the large company to ensure success of the linked SMEs (e.g.: 21st Century Printer (India)). The two critical inputs needed for success of an SME are technology and use of modern management processes. The Franchise model provides both of them.
Another technique to infuse technology and management processes is the formation of Clusters. Certain cities have become famous for the production of different products. In these clusters the supply chain for raw materials, technical personnel and marketing channels naturally develop. Each enterprise is small but the combined production of the industrial cluster is larger than the large companies in the same sector. Clusters have increased the success rate of SMEs by allowing combined learning and sharing of resources. There are natural or induced clusters. The induced clusters are created due to policy incentives, infrastructure availability or a large buying public sector unit.

Mr. Modi then underlined the importance of having a plan to deal with failure. Availability of funds at reasonable costs is the 1st problem which needs to be solved. Often enterprise are under-funded or have no hand-holding in case of problem. Mr. Modi spoke about a very successful programme from the City of Tokyo which encourages SMEs. The City Government created the Collateralised Loan Obligation (CLO) Scheme in which the Central Government and the City Government share the risks by providing guarantees to the extend of 75% of the funded loan to financial institutions.

Mr. Modi also spoke about safeguard measures against harassment of start-up SMEs. Often those who fund the start-up SME use aggressive tactics to recover funds in case the SME does not succeed. Schemes such as Chapter 11 Bankruptcy Protection (USA) are needed. Moreover, witch hunting of the entrepreneurs should be curbed with necessary legislation. Many great companies are born after an initial failure.

The role of the government in unleashing the potential of SMEs is crucial. It can for example provide training to SMEs, provide exchange of information and experience, create region to region business links, give its support for special credit scheme, provide a conduit for foreign funds, etc…

Mr. German Rios, Coordinator, Andean Competitiveness Programme, Andean Development Corporation (ADC) ; http://www.caf.com/pac

A project carried out by the CAF was presented: The “Programa de Apoyo a la Competividad” (PAC) seeks to develop clusters and productive capacity building. The PAC fosters entrepreneurship as well as better environment climate for SMEs. The application is vast. In Peru for instance clusters have been created in the production of asparagus, grape, and cotton as well as customer service has been improved thanks to single windows procedures applicable also in areas such as tourism (Hotel booking). Furthermore capacities in the confection of textiles for exports were expanded thanks to formation of managers, product designers, etc.

Mr. Marc Defosé, Director, European and International Affairs, BASF-Germany

After presenting quickly the company which he is working for, Mr Defosé talked about the crucial issue of improving the competitiveness of SMEs through enhancing productive capacity. Two different levels:
· Upstream, with the issue of the evaluation of suppliers. Indeed, BASF had implemented global guidelines, called “safety Matrix Concept”, in order to check if the latter comply with some requirements (Safety, Health and Environmental standards) or do not use child or forced labour. Then, BASF encourage SMEs to take a responsible attitude and try to support them to fulfil the “SHE-requirements”.
· Downstream, with making our customers more successful

Moreover, BASF use also the eco-efficiency analysis in partnership with the UNEP/UNIDO National Cleaner Production Centres.
This analysis is a tool for quantifying sustainability of products and process. It provides an assessment of the total costs and environmental impact that a product or a process creates over its complete life cycle. For example, Mr Defosé gave us the case of textile dye companies in Africa which had benefited of this programme to work more efficiently.
Furthermore, BASF developed a software package, called eco-efficiency manager, which ensures suppliers to identify areas for improvement.
Finally, the speaker made three proposals to creating opportunities in a globalized economy:
· A better link between TNCs and SMEs
· Good governance to facilitate co-operation and enhance foreign investment
· Progressive trade opening to reduce poverty and promote development


Ms. Marie–Florence Estimé, Deputy Director, Centre for Entrepreneurship, SMEs & Local Development (CFE), OECD

The purpose of the study was to show how GVC affects the role of SMEs and other traditional partners (suppliers…). The study also aimed at exploring benefits of SMEs participation in GVC and proposing policy actions. The study showed SMEs involvement in GVC through five industries: automotive, scientific and precision instruments, software, tourism and cinema.

The study drew different findings.
Concerning the understanding of GVC by SMEs, the study has shown that the latter had a limited understanding of the global context of production and do not always know their competitive advantage at the firm and industry level. Moreover, some SMEs stressed the lack of time and resources for developing a market strategy.
Concerning the co-operation along the production chain, case studies put the emphasis on networks which are becoming the main form of the co-ordination of work within the value chains. Studies also stressed the beneficial role of alliances and clusters.
Finally, concerning the topic of technology and innovation, Ms. Estimé stressed a lot of lack such as:

· inadequate protection of intellectual property rights by SMEs
· insufficient capacity to finance innovation
· inadequate R&D capacity
· difficulty to meet the technical requirements needed to participate in GVC

Ms. Estimé ended her statement by making several policy recommendations, which can be summarized as follow:

· increasing SMEs participation in GVCs
· promoting clusters and networks to improve small firm participation in GVC
· promoting innovation and skills development
· improving supplier financing
· protecting SMEs intellectual property rights
· Facilitating the adoption of product and process standards.

Report of the Expert Meeting on “Building Productive Capacities”, presented by the Chairperson H.E. Mrs. Sarala M. Fernando, Ambassador, Mission of Sri Lanka

The Meeting focused on the development and effective utilization of productive capacities. Moreover, it considered UNCTAD’s role in technical assistance programmes. The ability of the developing countries to compete in the global economy is hampered by supply side constraints. For developing countries overcoming constraints requires broad-based capacity building. The principal supply constraints which affect capacity building include: an inadequate regulatory environment, weak public institutional and administrative capacity, poor infrastructure and a limited resource base.

The areas of enterprise policy that could most benefit from technical assistance (for helping firm build capacity) were reviewed by experts. It was recognized that absorptive capacity is strongly dependent on interaction with the firm’s environment such as the availability of educated person, the quality of basic public service and adequate infrastructure. The policy makers in developing countries should pay more attention to the SME sector and the strengthening of entrepreneurship. This in turn would help attracting FDI. The role of entrepreneurship is seen by experts as crucial for building productive capacity. The effectiveness of the EMPRETEC programme in unleashing entrepreneurial potential was underlined. EMPRETEC help existing entrepreneurs to build innovative and internationally competitive SMEs through specific entrepreneurial skill training and advisory services.

Public/Private dialogue is also very important as it can increase corporate awareness and trigger socially responsible action by companies. There is a need to strengthen the private sector in developing countries. Finally, experts pointed out to the useful role of IO (UNIDO, ITC, ILO, WCO) in building the productive capacities of a country and recognized the important role of insurance in development.

Report of the Expert Meeting on “Best Practices and Policy Options in the Promotion of SME-TNC Business Linkages”,

The Expert Meeting focused on the development and effective implementation of business linkages. Moreover, experts considered the role of UNCTAD in assistance programmes based on partnership between transnational corporations (TNC) and SMEs. Experts identified a set of guidelines that must be considered for any successful business linkages programme. A crucial prerequisite is a conducive macroeconomic environment that provides economic stability and reduces the risks for participating countries. Furthermore, there has to be a critical mass of companies on both the supplier and the purchaser side in order to guarantee successful linkages. Moreover there has to be a long-term commitment on the part of all participants. In this context, it is important to make a strict selection of both SMEs and TNCs when implementing a linkage programme, the development of a pilot phase and the need for a champion.

As the case of Ireland and Uganda has shown a pilot programme is of great importance. The involvement of financial institutions and provision of credit facilities for SME has also proved crucial in the case of Uganda. Experts emphasized that the business linkage programme has to be led by the private sector while the public sector plays the role of facilitator to develop effective linkages through support mechanisms, financing and monitoring. If linkages are based on commercial rationale, we can have a win-win situation for all stakeholders in the programme. The best way to ensure the participation of TNCs is a business-to-business approach addressing the ideas and requirements of TNCs regarding their SME suppliers. So the necessity to include TNCs in the process of selection of their suppliers.

Experts also highlighted the importance of establishing an efficient and sustainable information network to overcome information gaps. In this regard they agreed on the importance of business development services (Genilem in Switzerland EMPRETEC in Argentina, Enterprise Uganda).

The main lessons learned from successful business linkages include the following: a conducive and coherent policy framework, the fact that business linkages are an important component of building productive capacities and should form part of the Aid for Trade initiative, value chain mapping by sector is necessary to facilitate business linkages, etc…

At present, there is a dynamic and positive environment for collaboration between TNCs and SMEs in developing countries. Successful TNCs can be engines for economic growth. On the one hand, TNCs are increasingly implementing their own supplier development programmes in order to upgrade SMEs’ skills and standards (e.g.: BASF in Brazil). On the other, value chain and innovative bottom of the pyramid business models have proven instrumental in promoting development (e.g. SAB Miller in Zambia). Further efforts are needed to raise awareness of good practices in respect of corporate contributions to business linkages. In conclusion, we can say that business linkages development can represent a win-win opportunity for both TNCs and SMEs to address constraints.

Finally, experts recognised the useful role of international development organisations in building productive capacities. The UNDP, IFC, ILO, UNIDO, ITC, GTZ have put in place different programmes targeting specific private-sector development issues.

Mr. Roberto Smith-Gillespie, Chief, IPSMS, International Trade Centre (ITC),

The purpose of this presentation was to understand the role of ITC in improving SME competitiveness for export.

The help of ITC is provided in close support with other Trade Support Institutions (TSIs comprise trade promotion organisations, business sector organisations such as chambers of commerce or industry associations, training and consultancy organisations, trade finance institutions, etc…). Indeed ICT work together with other institutions to respond to the questions that SMEs face in order to become more competitive for exports.

There are several questions which SMEs have to ask when starting a business. Among others: what are our potential markets demanding and what are their access requirement? ; how can our company benefit more from our country’s negotiations with its trade partners? ; What improvements in our country’s business environment would benefit us? ; how can our company improve its own competitiveness and better serve its customers? ; how can we make our value chains and sectors more competitive?

Regarding the first question ICT can give SME’s market information (market indicators, trends and opportunities; data on tariffs and other market access constraints) along with market research and advice, visits to markets and contacts with potential business partners, trade competitiveness assessment. Concerning the 2nd question, ICT can help businesses to understand the state of play and the implications of international trade negotiations. Moreover, ICT assists the business sector to partner with government in developing their country’s trade negotiating positions. Regarding the third question, ICT help SMEs to adopt more effective national export strategies, trade finance facilities, compliance with international quality standards, legal framework for trade, attracting trade-related investment, etc…Concerning the 4th question, ICT provide SMEs with business diagnostics and training and advice to improve the enterprise business development, the export strategy and management, the product development, the quality management, etc…Finally, regarding the 5th question, ITC tries to involve all sector stakeholders in making the diagnostic of market-oriented value chain, in developing sector strategies and actions plans or in promoting business linkages.

ITC work in collaboration with UNCTAD to support SME development for example with multi-agency initiatives (integrated framework, JITAP), joint projects (bio-trade facilitation; Investment Map), joint-initiatives at the Programme level (EMPRETEC, Business linkages (Brazil)), ITC contributions to UNCTAD expert meetings.

Contact: International Trade Centre UNCTAD/WTO
Web Site: www.intracen.org
E-Mail: smithgillespie@intracen.org


Mr. Federico Bonaglia, Economist, OECD Development Centre
http://www.oecd.org/topic/0,2686,en_2649_34665_1_1_1_1_37413,00.html

In this presentation 5 case studies of Tanzania, Zambia, Mali, Senegal and Ghana were presented. In these countries donor-based programs for agro-businesses were undertaken. Results were encouraging in the sense that donors can play a role for the development of agriculture in LDCs, although some reservations were formulated. For example many programs lacked in implementation or on the knowledge on the real needs of the recipients. Such programs need also to pay particular attention at no overlapping with other interventions and at aiming at whole sectors of business instead of only at single enterprises.

Mr. Jan Roodenburg, Senior Vice President, Supplier Development and Sustainability, Philips International B.V., www.philips.com

The purpose of the statement was on « building supplier capability ». Mr Roodenburg started by warning over climate change through the issue of the rising concentrations of greenhouse gases. He puts emphasize on the issue of energy waste.
According to the figures, the situation would be much better if available new technology were adopted around the world. Therefore, Mr Roodenburg made some proposals:

· Embedding sustainability in the whole value chain
· Involvement of all stakeholders (including suppliers) for improvement of products to go towards sustainability
· Implementation of an environmental program called “ecovision”
· Launch of the “Amandla” project which consist to replace all GLS lamp (former lamp) by CLF lamp in order to reduce significantly the energy consumption


Wednesday 21 February 2007

Item 4- Efficient transport and trade facilitation to improve participation by developing countries in international trade.

Introduction by the Secretariat

Trade facilitation is an important determinants of developing countries’ supply capacity and competitiveness in global markets. Unfortunately, transport costs today often surpass import tariffs ; developing countries being more affected than developed countries. Countries need to set an appropriate regulatory and legal framework. Four related topics in the area of trade logistics will be discussed. 1) trade and transport facilitation priorities (given limited resources countries have to prioritise which trade and transport facilitation measures they should undertake; factors that are relevant to the priority-setting exercise can be for e.g. : the composition of a country’s trade, the mode of transport commonly used, the level of concentration of a country’s foreign trade) ; 2) trade costs and transport connectivity (given the fact that most international trade is handled by liner shipping services, access to international liner shipping networks is a crucial determinant of a country’s trade competitiveness. The “connectivity” of a country depends on a number of factors, such as a country’s ports, the size of the deployed ships, the number of destination served, etc. Economies of scale, connectivity and trade facilitation often have a greater impact on transport costs than geographical distance) ; 3) legal and regulatory framework (the legal and regulatory framework is a critical parameter for trade facilitation. Internationally uniform laws, rules and standards and effective national implementation are key. Regional cooperation to effectively implement globally agreed rules and standard is also very important. Finally, emerging issues, such as security and environment should be taken into account by developing countries and developed countries alike. Trade facilitation can be summarized in three words: standardisation (process of developing internationally agreed formats for practices and procedure, for e.g. : the UN Lay-out Key), harmonization (alignment of national procedures, operations and documents with international conventions, standards and practice) and simplification ( process of eliminating all unnecessary elements and duplication for e.g. the ASYCUDA Customs Transit) 4) challenges for landlocked countries (importance of adequate transit arrangements)

Report of Expert Meeting on ICT Solutions to Facilitate Trade at Border Crossings and Ports , presented by the Vice-Chairperson, Mr. Emmanuel Farcot, Counsellor, Economic Affairs and Development, Permanent Mission of France

The objective of the meeting was to explore issues in the areas of trade and transport facilitation and ICTs. ICTs are playing an increasing role in trade and transport facilitation. The aim of trade facilitation is to harmonize and simplify international trade documents and procedures.

ICTs are for example playing an increasing role in the design and implementation of Customs modernization programmes. There is a need to adapt both national and international legislation to allow for the introduction of electronic documents.

Rules and standards are developed by various IO such as the WTO, the World Customs Organization (WCO), the International Organisation for Standardisation (ISO) and the UN Economic Commission for Europe (ECE). Proposals at the WTO negotiations on trade facilitation with an emphasis on the use of ICTs included Internet publication, establishment of enquiry point, computerized system to reduce discretion, automation, a single window, risk management, authorized traders, pre-arrival clearance, and post-clearance audit.

Land access is one major bottleneck in many ports, leading to long waiting times for trucks. A proposed solution involve additional infrastructure and ICTs that allow for better planning and faster operations. A Port Community System (PSC) for example is an IT platform that links all the actors of the transport chain in order for them to manage the information.

Customs automation is a crucial component of Customs reform aiming at modernizing Customs administrations and aligning the legal framework and procedures with international standards and best practices. Automation is helpful for the clearance of legitimate trade, it improves the efficiency of Customs controls and secure revenue collection. Moreover, it simplify border-crossing and administrative procedures. Finally, ICT can reduce the number and the potential negative impact of physical inspections.

Mr Matthias Meyer, Executive Director, Praximondo

The Panellists divided his presentation into 4 parts. Firstly he reminded that Trade Facilitation (TF) is a process that has to start on the administrative level of countries; that needs to be pushed from local governments. TF consists of a) adapting to international norms (tariffs, UN act formatting), b) transparent management and c) a gradual passage towards higher efficiency (“single window” administration). The experts pointed to the fact that in the last decade many countries have undertaken reforms in this sector for the following reasons: Reforms of Customs and of its related processes are profitable for governments (higher revenue) and private actors (cost and time savings). Furthermore many multilateral (WTO) or regional agreements pushed TF in many countries. The third question is: How much does capacity building cost? According to Praximondo it depends on the size of reform to be tackled. Basic reforms cost from USD 200’000 to USD 1 million per year and last from a few months up to 3 years. Higher efficiency reforms cost between a few millions and USD 30to 50 millions depending on how fast the reforms are to be accomplished. The experts affirmed that a thorough preparation process is crucial for achieving successfully changes in TF. This means that needs assessment (What the health of the Custom system?) has to be set up. Once this is done a concrete capacity-building plan needs to be drafted, which features a cost-benefits analysis of automation or management reform, best-practices of other countries’ experiences. The next step includes a capacity building plan (what is feasible?). Advice can be found at expert agencies in this area such as UNECE, UNCTAD, WCO, WB, IMF and ASEAN. At each stage it a number of conditions need to be fulfilled. This was the last part of the presentation: Private actors must be included in the process, although it constitutes a priority of governments to be proactive in first place. A policy and management planning unit needs to be established as well in order to analyse and adjust the reform process.

Mr. Jean Acri and Mr. Peter Krausz, International Road Union (IRU) on the subject of “Recent Development in International Trade and Transport Facilitation with specific focus on transit related issues.”

This presentation focus on recent development in international trade and transport facilitation. One of the main priority of IRU is trade facilitation in particular the facilitation of the road freight transport. One major problem is the border waiting time. IRU suggests to improve procedures, change stakeholders’ mindset and invest in physical infrastructure. Another problem is the visa matter. The solution proposed by IRU includes the following elements: identifying international drivers as a special category, issue annual multiple-entry visas for reasonable fees, reduce issuance time and application documents, etc…The TIR Convention (which came into force in1975) can facilitate those issues (if complemented by national measures). The TIR System is an international transit system for goods carried entirely or partly by road.

International Road Union (IRU)
Web Site: www.iru.org
E-Mail: iru@iru.org

Other: Global Facilitation Partnership for Transportation and Trade (GFPTT)
Web Site: www.gfptt.org










Thursday 22 February 2007

ICT and E-Business for Development

Introduction by the Secretariat

Information and Communications Technologies (ICT) have become an important element of development strategies and policies in developing countries. ICT is a powerful instrument to enhance productivity and competitiveness of enterprise, notably by encouraging and facilitating innovations in the productive sectors. The dynamic relationship between e-business and innovation is increasingly recognized at the policy level. It is also recognized that the goal of ICT policies should be to enable enterprises to use technology in an effective manner so that they become more innovative and more competitive.

Prof. Danny Quah, London School of Economics, on the subject of “ICT for Development and Innovation”

The central issue of this presentation was to understand how ICT can help developing countries grow. The Professor Quah explained that the world remains deeply divided (digital divide: % income rich = 55, poor = 34 ; % internet users rich = 63, poor = 27 ; PCs rich = 73, poor = 18) but no longer uniformly (for instance, there are more mobile phone users in the developing world than in the developed one).

ICT is good for growth and development as a survey of 50’000 firms in 56 countries shows. The comparison was between firms using email versus firms without email. The results for firms using email was a 10 times sales growth, twice much profitability, and a higher employment growth. Similar results were observed for computer usage and website interactivity. Moreover, the survey shows that a 1% increase in the internet population of a country, raises the exports of that country by 4.3%.

Report of the Expert Meeting “In support of the implementation and follow-up of WSIS: Using ICTs to achieve growth and development”, presented by the Chairperson, Mr. Jaya Ratnam, Deputy Permanent Representative of Singapore to the UN, Geneva

This report of the expert meeting was presented by Mr Jaya Ratnam, deputy permanent representative of Singapore. The goal of the meeting was to present the impact of ICTs on productivity and competitiveness and their potential to accelerate economic growth in developing countries.

The experts’ work focused around the following points:

II. The impact of ICTs on productivity and growth

Experts analysed that globalisation and delocalisation of ICT production led to productivity gains in many developing countries (China with hardware production for example). The impact of ICTs on productivity and growth has been also reflected by a series of case studies and projects conducted in Thailand and Ghana. The latter case studies demonstrated significant progress in spite of the lowest ICT penetration in Africa. Mr Ratnam ended saying that training and education remain among the pillars of pro-growth policy action.


III. Impact of ICTs on business sectors

The adoption of ICTs creates unprecedented opportunities for industries and businesses in developing countries to overcome constraints posed by limited access to resources and market. Different levels are concerned:

· At the firm level, ICTs ensure better access to knowledge and information, lower transaction costs, coverage of larger market and improved decision-making
· For SMEs, adoption of ICTs holds a large potential for development and employment creation. Moreover, ICTs investments could help developing countries to reduce the rigidities created by poor growth performance and high uncertainty among SMEs.
· In banking and finance, ICTs use can improve credit information structure in developing countries in order to enhance local firms’ access to trade finance and e-finance.
· The sector of tourism can also get some benefit from ICTs’ adoption. Indeed, by being actively present in the web, developing countries ensure a visibility of local tourism. Thus, e-tourism enable small tourism enterprise to access the global market on condition that public authorities involve firmly and that government provide the necessary infrastructure (broadband internet access…).

IV. ICTs and international trade in goods and services

While many countries (like India) had benefited from international trade in ICT-enabled services, the issue remains to know how to increasingly take part in a global technology development.

Mr Ratnam also emphasized the governments’ role as a trade facilitator. He gave the example of China where the government improved human resources and skills in management, maintained a high-level international quality certification, better enforced IPR protection and diminished administrative interference in business activities in order to attract outsourcing companies. Doha round suggested tariff reduction for technology products. Further negotiations might focus on ICT issues including the inter-linkages between the different modes of delivery, the implementation of standards as trade facilitator, e-government…Furthermore, studies proved that the technological nature of products could affect and change the international trade regime because of heterogeneous IPR implications brought about different digitally tradable products. Therefore, bilateral negotiations are useful.

V. Impact of ICTs on labour markets and employment

ICTs generated changes in the nature of labour demand, favouring qualified persons able to work in competitive and rapidly changing environments.
The improvement of managerial and entrepreneurship capacities could make enterprises more competitive and thus generate decent employment.
Skills are also changing and do not have to be only technical. Indeed, due to the increase of the bandwidth, skills are seen as very important, in particular language skills for being able to work with foreign multinationals.
Then, Mr Ratnam stressed the deficiency of statistics on employment in the ICTs sector because it was related to business cycles. Finally, He talked about the different impact of ICT-related employment on gender. Statistics shows that participation rates of women in the labour market, while is increasing, is significantly lower than those for men, in general in managerial positions.

VI. The way ahead

All stakeholders agreed to feel that sustainable and competitive market dynamics were moving in the right direction in developing countries. However, the latter should also develop other drivers as human resources, innovation system or business environment.


Mr. Charles Geiger, Special Advisor, Science and Technology, UNCTAD, former Executive Director WSIS: ICT for development in the context of WSIS implementation and follow-up

The WSIS Summit called for a development oriented information society.
WSIS web site: www.itu.int/wsis/


UNCTAD secretariat : ICT policy evaluation and the role of ICT measurement

UNCTAD activities relevant to the implementation of the World Summit on the Information Society (WSIS) is inter alia the following : UNCTAD assists developing countries in formulating and implementing national ICT policies and strategies in order to foster the promotion of e-business, export capacity and competitiveness. Moreover, UNCTAD carries out research and analysis on ICT and e-business for development. The results of this work are published in the annual Information Economy Report and on several web site:

www.unctad.org/ecommerce
http://measuring-ict.unctad.org/
http://www.unctadxi.org/templates/Startpage_2774.aspx

UNCTAD also monitors and analyses development in ICT, provides capacity-building activities and advisory services in the area of legal aspects to e-commerce to help developing countries draft e-commerce legislation (in cooperation with UNCITRAL), assists developing countries participating actively in international discussions that can have an influence on the development of ICT. In the context of the E-tourism initiative, UNCTAD provides a course on e-tourism assessing the opportunities and impact of ICTs in the tourism sector. The Web site is the following: http://etourism.unctad.org

UNCTAD also has developed a training course on the legal aspect of e-commerce delivered through face-to-face training or distant learning. The UNCTAD Virtual Institute has developed training materials for use as stand alone distant learning packages. As already mentioned UNCTAD proposes ICT solutions to improve customs performance through its ASYCUDA programme (www.asycuda.org).

Mr Sarbuland Khan, Executive Coordinator of the UN Global Alliance for ICT and Development: Forthcoming challenges in ICT for Development

The environment in ICTD (ICT-for-development) has evolved thanks to momentum generated by the WSIS. The goal now is to implement policies and programmes. Progress can be made through multi stakeholder platform like the Global Alliance for ICT and Development (GAID). (www.un-gaid.org) GAID was founded last year by the UN SG. Its mission is to transform the spirit of WSIS into action and to promote the use of ICT for the achievement of the agreed development goals. GAID’s focuses on four area: education, health, governance and entrepreneurship. GAID’s key instruments are Flagship Partnership Initiatives (FPIs) and Communities of Expertise (COEs). Mr. Khan highlighted four macro-level challenges that GAID must address in the immediate future if it want to realize the development goals by the 2015 deadline. Tapping the “bottom of the pyramid” (industry should expand ICT to the poor in the developing world. The opportunities of tapping this market are not fully perceived as relevant for the moment but even the poor can become good customers. It could generate profit for the company and economic growth for the country), investing in infrastructure, mainstreaming ICTD in development (quantitative proof of the impact of ICT could support the assertion that ICT delivers development results), scaling up and replication of ICTD programmes.

Friday 23 February 2007

Member States adopted the agreed recommendations and the report of the Commission on the Trade and Development Board.



Youcef Seridj, Luca Bellotti, Laurence Roth