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WORLD TRADE

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WT/COMTD/SE/M/128 June 2002

(02-3617)

Committee on Trade and DevelopmentFirst Dedicated Session

NOTE ON THE MEETING OF 25 APRIL 2002

Chairman: H.E. Mr. Toufiq Ali (Bangladesh)

Subjects discussed:

A. ADOPTION OF THE DRAFT AGENDA...............................................................................1

B. WORK PROGRAMME ON SMALL ECONOMIES – ISSUES RELATING TO THE TRADE OF SMALL ECONOMIES - COMMUNICATION FROM BARBADOS, BELIZE, BOLIVIA, CUBA, DOMINICAN REPUBLIC, EL SALVADOR, FIJI, GUATEMALA, HAITI, HONDURAS, JAMAICA, MAURITIUS, NICARAGUA, PAPUA NEW GUINEA, PARAGUAY, SOLOMON ISLANDS, SRI LANKA, TRINIDAD AND TOBAGO (WT/COMTD/SE/W/1)......................2

C. OTHER BUSINESS..........................................................................................................16

A. ADOPTION OF THE DRAFT AGENDA

1. The Chairman reminded delegations of the background to the dedicated session and indicated that the work on small economies was mandated by paragraph 35 of the Doha Ministerial Declaration which stated that:

"We agree to a work programme, under the auspices of the General Council, to examine issues relating to the trade of small economies. The objective of this work is to frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system, and not to create a sub-category of WTO Members. The General Council shall review the work programme and make recommendations for action to the Fifth Session of the Ministerial Conference.".

2. The General Council had, at its meeting of 1 March 2002, instructed the CTD to have a programme of work on small economies which would be conducted in dedicated sessions. It was also stated that the CTD should report regularly to the General Council on the progress of the work in the dedicated sessions. Elements of the Work Programme on Small Economies could be found in Document WT/L/447.

3. The draft agenda was contained in Airgram WTO/AIR/1774 of 19 April 2002.

4. The agenda was adopted.

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B. WORK PROGRAMME ON SMALL ECONOMIES – ISSUES RELATING TO THE TRADE OF SMALL ECONOMIES - COMMUNICATION FROM BARBADOS, BELIZE, BOLIVIA, CUBA, DOMINICAN REPUBLIC, EL SALVADOR, FIJI, GUATEMALA, HAITI, HONDURAS, JAMAICA, MAURITIUS, NICARAGUA, PAPUA NEW GUINEA, PARAGUAY, SOLOMON ISLANDS, SRI LANKA, TRINIDAD AND TOBAGO (WT/COMTD/SE/W/1)

5. The Chairman said that Document WT/COMTD/SE/W/1, submitted by the delegations of Barbados, Belize, Bolivia, Cuba, Dominican Republic, El Salvador, Fiji, Guatemala, Haiti, Honduras, Jamaica, Mauritius, Nicaragua, Papua New Guinea, Paraguay, Solomon Islands, Sri Lanka, Trinidad and Tobago, contained issues relating to the trade of small economies.

6. The representative of Mauritius made a brief presentation of the Document his delegation had tabled together with a number of co-sponsors. He recalled that at the Second Ministerial Conference in Geneva in 1998, the growing marginalization of small economies had been recognized and urgent measures to address them had been called for. Unfortunately, not much had happened at the Seattle Ministerial Conference. However, at the Doha Ministerial Conference in November 2001 Ministers had agreed to the establishment of a Work Programme under the auspices of the General Council, to examine issues related to the trade of small economies and to frame responses to those issues to facilitate the fuller integration of small economies into the multilateral trading system. After the Doha Ministerial Conference, a series of constructive consultations had been held and the proposed Framework and Procedures for the establishment of the work programme had been submitted to the General Council, as a communication from the Chairman, on 1 March 2002. The General Council had taken note of the Framework and Procedures for the conduct of the Work Programme on Small Economies, and the substantive work was now beginning with the first Dedicated Session of the CTD. His delegation hoped for an equally good start to the work in the CTD as had been given in the General Council with the adoption of the Framework and Procedures.

7. He went on to say that a group of countries had tabled a Document (WT/COMTD/SE/W/1). The list of co-sponsors of that Document was not exhaustive. The nine paragraphs contained in that Document were self-explanatory. The Document identified the trade related issues of vital concerns to the small economies. He would highlight three of the nine paragraphs. First, paragraph 2 made reference to the analysis and research work already carried out by academic institutions and other intergovernmental fora, including the UN, World Bank, UNCTAD, and FAO. His delegation had requested the WTO Secretariat to compile all those Documents as it would constitute a necessary tool for identifying trade remedies that could address the needs of small economies. The WTO Secretariat had responded to the request by providing a list of references to small economies in the discussions in the WTO. His delegation would consider those references and would get back to the WTO Secretariat for more detailed information. He went on to say that paragraph 4 of the Document highlighted nine characteristics of small economies which made them particularly vulnerable. For example, subsection (g) of paragraph 4 referred to physical isolation and geographical dispersion and remoteness from main markets. In addition to what was written in 4 (g) he said that small islands often suffered from geographical isolation which prevented them from establishing physical infrastructural linkages with other neighbouring countries. They could not build cross border roads as they were islands; neither could they build bridges or canals that would facilitate easy and quick transport of goods and of persons between countries. Because of their isolation, they could not establish cross-border pipelines which would guarantee regular supply of basic consumables such as water, oil and gas as was the case for number of developed countries. They were therefore exposed to shortages and even break-downs in case of unforeseeable event such as cyclones, political conflicts, and embargoes. Paragraph 5 identified a number of implications which were the results of vulnerability, remoteness, and geographical dispersion; implications that had an adverse effect on the trade and development of small economies. He further said that the subsequent paragraphs 6 to 9 indicated the direction in which the proponents of the Document wished to move in terms of preferential trade, foreign investment, the rules of the multilateral trading system and the difficulties that small administrations had to often grapple with. His delegation did not wish to embark on a substantive discussions at the

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first dedicated session. A broad discussion of characteristics and challenges was rather what he had had in mind. However, the reasons why he still pushed ahead at the first dedicated session was that after the Doha Ministerial Conference, a number of other WTO delegations had approached the small economies asking what a small economy was and how it was defined. That was why the Document had been produced. The second reason why he wished to move the issue forward was that being small and vulnerable, the small economies wished to secure a consensus recognizing the special economic challenges and problems they faced. Even if the Committee did not embark upon any substantive discussion of concrete proposals at its first session on how to address the problems faced by small economies, it did not mean that the delegations concerned had not identified priority areas. Apart from securing greater recognition of their economic realities, another priority area was enhanced representation of small states in global fora. He indicates that they were working towards the formation of a broader global association of small developing states, including those who were not represented in Geneva and that the WTO should facilitate the accession of those countries, in order for them to be physically present in Geneva. That would help consolidate the global association of small developing states. Exchanges of experience should be promoted as the small economies belonged to different geopolitical and geographical groups and regions, as should the development of good practices in regional cooperation among small states. Another area of priority was to analyze the approaches to be taken to mitigate disasters. The small developing countries were often hit by all sorts of natural disasters: cyclones, earthquakes, floods, and rise in sea level. Something therefore had to be done in the area of disaster mitigation. Lastly, the small economies were also considering the provision of differential treatment in the formal preferential access to developed country markets through, for example, tariff preferences or exemptions from stringent WTO rules that the small economies could not fulfill. Technical assistance and capacity building were necessary to enable the small economies to participate more actively in the negotiations. Although the Document submitted focussed on the characteristics and implications that the WTO rules had for the trade and development of small economies, it also gave an indication of the direction in which the authors wished to move the process. He requested the Chairperson to provide an indication of the number of meetings he proposed to hold before the Mexico Ministerial Conference, in order for the group of small economies to provide the Committee with a detailed road map. That road map would be submitted well before the following dedicated session in order to allow for consultations on it, if necessary. It was important that the work moves forward in an orderly fashion, and the Committee should acknowledge the efforts made and provide assistance in this regard.

8. The representative of Paraguay said that pursuant to the mandate set forth in paragraph 35 of the Doha Ministerial Declaration, the countries that considered themselves to be small economies had submitted the Document containing a proposed work programme, which required the approval of the CTD in order to address the problems that small economies faced in the areas of international trade so that these countries could fully integrate into the multilateral trading system and their vulnerability reduced. As the first stage of analysis, the developing countries sponsoring the submission had tried to define what was meant by a small economy. He said that while there was no clear cut definition of small economies, they could still be identified, as had been done in paragraph 4 of the Document. All small economies had something in common, even though there were many differences among them. What they had in common was their vulnerability and their true "smallness" in the economic sense, regardless of their actual size or the size of their populations, and the fact that all of them were truly outside the international trade circuit. While they did not make up a category comparable, for example, to the least-developed countries, they did have problems which made their integration in international trade difficult. He went on to say that he wished to explain why Paraguay qualified as a small economy. The main reason was that Paraguay was a landlocked country, without any access to the sea, with the enormous problems and challenges that this implied. It had therefore found itself at a disadvantage from the very outset in international trade. It was isolated; it depended on transit through third countries; it was burdened with particularly high freight costs to the port of shipment, faced administrative restrictions of all sorts; it depended on the means of transport available in neighbouring countries; problems which at times were aggravated by a deficient road network and transport infrastructure. This situation had been recognized in the Resolution adopted by the United

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Nations General Assembly - the Millennium Declaration (55/2) - on 18 September 2000, paragraph 18 of which stated that: "We recognize the special needs and problems of the landlocked developing countries, and urge both bilateral and multilateral donors to increase financial and technical assistance to this group of countries to meet their special development needs and to help them overcome the impediments of geography by improving their transit transport systems"; and it had also been recognized in Article V of the GATT 1994. For the same reasons, the International Forum on Trade Facilitation, which was to be held in Geneva on 29 and 30 May 2002 under the auspices of the United Nations Economic Commission for Europe, in cooperation with the WTO, UNCTAD, the World Customs Organization, and the International Trade Commission, would be devoting a session to the specific problems of the landlocked countries. His delegation had co-sponsored the submission with the other small economies, since indeed, the implications of Paraguay's landlocked situation and its small economy had been clearly described in paragraph 5 of the Work Programme. The geographical factor, the fact of not having any access to the sea, in other words of being isolated on an island surrounded by land, should not by itself be a negative factor and make his country more vulnerable than others to the international markets. Solutions had to be found, and that meant dialogue and a far-reaching analysis. His delegation therefore hoped that the Committee would be moving on to the second stage, including submitting recommendations and conclusions that would contribute to the integration of the small economies in international trade. The objective was to overcome the vulnerability from which small economies currently suffered and help them compete in world trade on an equal footing with the other countries. Ultimately, that should contribute to the development, both economic and social, of the small economies.

9. The representative of Djibouti said that his delegation recognized the problems that small countries cut off from the rest of the World, faced. The Committee should be sensitive to the problems of those countries and advocate their interest in the General Council so that a decision in their favour could be taken at the next Ministerial Conference.

10. The representative of Fiji reiterated his delegations' sponsorship of the Document WT/COMTD/SE/W/1 on small economies, and endorsed the issues it contained. The Document, in his view explicitly highlighted the problems that Fiji shared with other small island countries and small economies. His country was a developing country with a narrow economic base. In fact, it depended on a single crop, sugar, to sustain its economy. Furthermore, Fiji was not one island but consisted of 300 small islands, scattered over a large expanse of the Pacific Ocean which exacerbated its problem of vulnerability and isolation. The problems faced by a small island country like Fiji, in sensitizing Members in the WTO to the fundamental problems his Government faced in formulating and administrating trade policy could not be over-emphasized. His Government had difficulty in implementing WTO provisions and in using the WTO to deal with its trade problems. More importantly, the present WTO provisions did not often reflect the specific needs of a small island economy. His Government therefore, once again, underscored the need for timely technical assistance. The Geneva Week had been valuable, but the Geneva Week had also illustrated the need for vulnerable and small economies like Fiji to have a representation in Geneva so that its voice could be heard on issues such as those highlighted in the Document. His delegation looked forward to making further contributions as the work programme on small economies developed.

11. The representative of Macao, China said that, at the outset, his delegation joined others in welcoming the submission in Document WT/COMTD/SE/W/1 regarding small economies. His delegation supported the efforts made to discuss the issue of small economies in a constructive manner, particularly the constraints they faced in the multilateral trading system. His delegation shared some of the specific concerns and constraints of small economies highlighted in the Document, including on insignificant share of world trade; a limited size of the domestic market; the lack. and often absence, of natural resources; limited amount of manpower; heavy reliance on external trade, particularly on the major trading partners; the concentration of exports in only a few products; and their non-competitiveness in being able to access global market. In Macao, China, which had a population of 430 thousand inhabitants in a small area of 26 Sq.km, all the above limitations referred to, existed. The representative of Macao said that he would elaborate more on each. The small

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internal market could not help the traders of Macao, China to enjoy any benefits which may arise from economies of scale. Further, the absence of natural resources in Macao, China limited efforts to pursue economic diversification policies. While Macao, China had been implementing the WTO Agreement in a faithful manner, the lack of human resources limited its efforts to participate effectively in the multilateral dialogue, especially in view of the heavy agenda of issues being deliberated and negotiated in the WTO. Another concern was the lack of market access opportunities for small economies. The majority of trading firms in Macao, China were small and medium-sized enterprises (SMEs), with limited capital. They were thus, unlike other multinationals, considerably less competitive in obtaining access to the global market. In this connection he recalled that the representative of Canada had put forward a negotiating proposal on SMEs in the context of services negotiations. His delegation wanted to look at the definition of SMEs since many characteristics of SMEs in other countries might not apply to small firms in small economies. The weaknesses of SMEs in small economies limited their chances to enjoy the benefits of trade liberalization. These vulnerable firms were mainly "price takers". They were less competitive to access global markets, and lacked opportunities to enjoy any benefits of economies of scale. They were thus more vulnerable to marginalization. Further, heavy reliance on external trade another characteristic of export-oriented economies. In Macao, China, the external demand in the year 2001 accounted for 35.8 per cent of the GDP. The heavy demand on exports of goods and services mainly went to a limited number of trading partners and was concentrated in a narrow range of products and services. It was therefore clear that the economy of Macao, China was vulnerable and that its future economic development depended to a large extent on the import demands from its major trading partners. Trade statistics were more self-explanatory and persuasive than other arguments. According to WTO statistics, in 1995, the year of the establishment of the WTO, Macao, China accounted for only 0.08 per cent and 0.05 per cent of global exports and imports respectively. However, in year 2001, the share of this vulnerable small economy was only 0.06 per cent of exports and 0.03 per cent for imports. That was an example of the marginalization of a small economy. Such results could not be deemed to be a normal trade fluctuation. They should, to a large extent, be regarded as a sign that small economies could not effectively respond to the rapid globalization of trade and enjoy the benefits from liberalization, as the global trade rules did not take full account of the structural constraints of small economies, such as the limited size of the domestic market, the absence of economies of scale, and the narrow range of goods and services to export and the limited export markets. His delegation had been considering how small economies could bear the risk of marginalization in the context of trade globalization. While Macao, China firmly subscribed to free trade, his delegation had observed that greater market access, including preferences would, to a certain extent, complement the structural impediments of small economies. In that regard, he believed that the WTO should find a way to ensure that no member is marginalized. Any corrective or preventive action taken against marginalization would be a good instrument to facilitate the integration of small economies into the multilateral trading system. Small economies would then benefit from trade liberalization with all Members.

12. The representative of New Zealand said that the Document submitted clearly identified a number of broad issues of concern to small economies. Her delegation, as a small, although developed country, well appreciated some of the challenges. Her Government had in the past attempted to alleviate some of these concerns by pushing for a strengthening of the multilateral trading system as a possible means for compensating for their small size and heavy reliance on trade as a proportion of GDP. A few of the issues raised in the Document, especially those that were more directly related to trade and issues under the WTO mandate, were being discussed or were relevant to discussions in other WTO bodies and negotiation fora. Her delegation hoped that activities in these areas would contribute to an alleviation of some of the small country concerns and challenges. It would useful for the CTD to be aware of the work being done elsewhere and for the small economies to pursue some of their concerns in those negotiations as well.

13. The representative of El Salvador said that for them and for the other delegations which participated in the drafting of the work programme for small economies, it was of crucial importance

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to pool the commitment of Members to be able to meet the mandate of the Ministers enshrined in paragraph 35 of the Doha Ministerial Declaration. There was no doubt that as part of the globalization process, national capacities were often set off against each other in the areas of goods and services. The size of different countries and their economies was important in this respect. For a long time, small economies had been dealing with problems similar to those faced by other countries. However, small economies also had to deal with certain unique constraints. They had to begin the process of liberalization with certain inherent weaknesses, looking for the best possible outcomes. The small economies had reaffirmed their commitment to the multilateral trading system as the only possible way forward along the path of development. However, the small economies needed support. Each Member had to contribute to ensure that the small economies were more fully integrated in the system. The inherent problems, along with the dependency on exports meant that, along with lower institutional capabilities, they were incapable of dealing effectively with multilateral rules. They also lacked access to markets and faced rigid conditions when attempting to integrate into world trade. That was why it was important to address the concerns of small economies. A Document relating to the work programme for small economies had been submitted. The intention was to make appropriate recommendation for the Fifth Ministerial Conference. They knew that the path would not be easy but they were confident that the initiative which would emerge from the Committee would result in concrete activities. The public at large and the Membership would see that Members were prepared to live up to the commitments made at the Fourth Ministerial Conference to direct and support the process of integration of countries which did not fully benefit from the process of economic liberalization of global trade.

14. The representative of United States said that her delegation was pleased that the proponents of the work programme had brought to the attention of the Committee issues which would help delegations better understand the constraints and problems of small and vulnerable economies. Delegations had benefitted from previous WTO seminars and symposiums which had shed some light, but had also raised questions. As more information was shared regarding specific concerns and issues, such as those raised by the representative of Fiji, delegations would get a better sense of the work that was necessary to be undertaken in the WTO context. A number of elements had been identified in the Document which contributed to this exploratory process. However, some of the concerns which had been highlighted appeared to be similar to the problems faced by developing countries as a whole and it would, therefore be difficult for delegations to make a distinction between the two. For example, concerns with respect to dependency on trade and on exports and the limited availability of exploitable land and resources, had also been raised by other developing countries. Her delegation was therefore looking for further clarifications as to what distinguished small economies from other developing countries. Some issues highlighted in paragraphs 4 and 5 of the Document already showed some of these distinctions which could obviously be discussed. These included the issue of natural disasters and the size of the domestic markets and population. Her delegations looked forward to hearing more about the studies mentioned in the Document and studies done by other organizations in this regard. With respect to paragraph 5(i) which stated that "Lack of a critical mass makes it very difficult to apply new technologies", she said that her delegation previously had voiced the inability of developing countries to take advantage of e-commerce. In the CTD, there had been a report concerning the seminar which had taken place earlier the same week. That seminar and others before it had been enlightening, especially when entrepreneurs and officials from developing countries had shared their experiences. It would be useful in the discussion of small economies, to similarly hear from the proponents about the challenges they faced and about success stories. She assumed that success stories existed and, in some instances, new technologies and electronic commerce might have been used. In the WTO work programme on e-commerce, her delegation had stated that just as e-commerce had brought SMEs closer to markets they typically would not have been able to access, e-commerce could probably help small economies in the same way. The representative of Macao, China, had mentioned Canada's proposal in the Services context. Those had been useful comments and her delegation wished to hear more from small economies about what kind of ideas they had with respects to specific activities in the WTO. Her delegation sought a clarification with respect to paragraph 8. She asked if the conclusion of that paragraph was in a way indicative of creating a separate sub-category of small developing economies. Finally, when technical assistance needs were

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being considered, there should be particular emphasis on helping any Member, or a country in the process of accession, which faced particular difficulties in addressing some of the elements highlighted in the proposal. There was a need to hear more from those delegations about their problems as technical assistance at large should be demand-driven.

15. The representative of Dominican Republic said that, as it was one of the proponents of the Document. It was clear that small economies had unique problems and faced non trade barriers which were difficult to overcome. Among those he mentioned the low, if not insignificant, participation in world trade, the low resource base which lead to high import and export dependence, the fact that exports were concentrated on a few products and depended on a few markets and that small economies suffered frequent natural disasters. On the other hand, despite the efforts that had been made by small economies to comply with the rules and standards of the multilateral trade system, the fact was that many of those very rules of standards threatened the social, political and economic stability of the countries as they imposed obligations without taking into account the specificities and constraints of small economies. In many cases, these rules and standards did not meet the specific trade needs of small economies. The WTO work programme on small economies might constitute a basis for the recognition of the unique situation of small economies and create the basis for specific action to resolve the unique problems and help to integrate small economies into the multilateral trade system.

16. The representative of Saint Lucia said that he wished to answer one of the several questions posed by the representative of the United States which had asked for success stories. For many of small countries, success could be registered merely in terms of their survival. The fact that his island was still afloat might, in itself, be a success given the buffetings which countries like his went through. The Document submitted made an indispensable and most valuable contribution to the understanding in the WTO about the vulnerability of so many of its Members. There were several small countries which were not co-sponsors of the Document. The reason was not that there was a lack of concern or interest or of commitment to the cause of overcoming the difficulties which small countries faced. Rather, the reason was that many of those small countries did not have Geneva-based delegations and could not therefore be involved in the process leading to the joint submission of such proposals. Several delegations, many of whom were amongst the smallest and most vulnerable Members of the Organization, were only present because of the Geneva Week; an arrangement which brought many Members to Geneva who otherwise did not have the opportunity to participate in the deliberations in the WTO. Even if several small economies were not co-sponsors of the Document, they still associated themselves with the issues and concerns reflected in the Document. When the issue of small economies was taken up, delegations should bear in mind that the small economies were numerous, even if their voices were not regularly heard.

17. With respect to how to proceed with the work programme on small economies, he went on to say that the Document was useful because it asked certain fundamental questions such as to why there should be a special programme for small economies. The problem was that the very fact of smallness caused difficulties and placed constraints on many countries as they sought to participate in the global economy. These difficulties had not been appreciated some years ago. What was required was to further clarify and explain why smallness led to difficulties in trade. Smallness in itself was a difficulty and that was what others had to understand. The Document was invaluable in that respect. However, the work programme had to go beyond that. It was not only a matter of recognizing that problems existed. The Committee would need to agree that something had to be done. It was not even a matter of definition. Debates regarding smallness were often side-tracked, concentrating on what the definition of "smallness" should be and about which countries should fall within this category. This was a futile debate. What had to be appreciated was exactly what the Document had focused on, the identification of the objective difficulties which small economies faced and which called for attention if these countries were to be able to trade on the same footing as other countries. When his Government had joined the WTO, it had been in the hope that they would be able to trade like all other WTO Members. This had been the purpose. If it was recognized that there were certain

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impediments which prevented small economies from trading on a level playing field, it then beheld the WTO to find the flexibility within its rules in order to meet the objectives of the organization. The WTO was not meant to serve only Members of a particular size or economic strength. It was meant for all Members, large or small, including those which, because of a lack of resources, were unable to be physically present at meetings to make their voices heard and their concerns impressed upon the rest of the membership on a regular basis. The Committee had to go beyond the Document to identify concrete measures. It was good to piously recognize that some Members had difficulties. However, unless the courage existed to agree that there was a need for flexibility in the rules and that there had to be certain special provisions in them to accommodate the concerns of these countries, delegations like his would continue to face difficulties. The existing special and differential treatment provisions had not been sufficiently sensitive to the needs and concerns expressed in the Document. The reason was not a lack of will, understanding or sympathy. It was because most of the small and vulnerable Members had not been present to express their concerns when this issue was being discussed. Occasions like the Geneva Week were useful as they provided the non-resident delegations an opportunity to make the rest of the membership aware of their concerns. He urged the Committee to build upon the Document submitted and to move on to identify a set of more targeted measures. When the work programme was being revised, it should take into account the needs of all Members, not only those who were based in Geneva.

18. The representative of Chile said that his delegation was analyzing the Document submitted. It was a useful and constructive Document which constituted a good basis for continued discussion. There were undoubtedly many elements which had to be considered more carefully. There was not much for his delegation to add to what had already been said by the representatives of New Zealand and the United States. Some of the elements which were touched upon in paragraph 4 of the Document were not exclusive concerns to that group of countries. There were difficulties mentioned there which other developing countries also faced. Some elements which his delegation would be interested in considering in greater detail were those mentioned in paragraph 5, relating to the consequences and repercussions for small economies. Subsection (a) refered to "highly open economies" for example. He asked what the rational for that particular point was in terms of its implications for small vulnerable developing countries. His delegation had the same question with respect to (f) which stated that "Firms in small economies are microfirms by global standards" and that "As a consequence, they are at a major disadvantage,…". He asked what the thinking behind that was. In addition in paragraph 4 also, there were some elements which did not exclusively concern small economies. There were many aspects that could be further discussed and the Document was a good basis for such a discussion.

19. The representative of European Communities said that his delegation was grateful for the additional explanations provided by the small economies which highlighted the concerns the Committee needed to look at with in its work programme. Non-residents and small and vulnerable countries often seemed to fall into the same category according to the statements made. With respect to the Document itself, his delegation agreed that the suggested work programme provided the Committee with two tasks. One was to examine and analyze. Paragraphs 3, 4, 5, of the Document fell into that category. His delegation would be interested in any work that the Secretariat might have carried out to screen earlier discussions on the subject. Such work should be made available for all Members to consider. His delegation asked for a word of explanation on any such Secretariat work. As a second point, he was grateful for the explanation given by the representative of Mauritius who had stated that the concerns could be addressed in a number of ways, and not only those mentioned in paragraph 6, 7, 8, and 9 of the Document. Possible responses could also include issues like helping members to be more active in the WTO; trying to improve their representation, not only through Geneva Week but also through a broader representation or through a global association of the countries concerned. The ACP Secretariat had been set up with that in mind. Other initiatives had been undertaken by the WTO Director-General. His delegation was looking at all such responses and looked forward to a debate on the more detailed elements on how to move those issues forward. He felt that such an exercise should result in the framing of responses and possible recommendations to the Fifth Ministerial Conference.

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20. The representative of Belize said that he wished to make three points. The first dealt with the issue of "success stories" as highlighted by the representative of Saint Lucia. His government was not of the opinion that simple survival represented a success story. What delegations had before them was not a success story. It was mere existence drift, that was what the small economies were engaged in. To talk about success there had to be significant increases in the small economies share of world trade, significant improvements in their level of development and reductions in their vulnerability, whether exogenous or not. It had to be a combination of several different factors, not necessarily of one or two little things that could be pointed to. Secondly, he said that the representative of the United States had raised the issue of e-commerce and its potential importance as a tool for growth and development for small developing economies. While his delegation recognized the importance of e-commerce as a strategy option for engagement, it felt that any such strategies had to be considered within the context of the broader strategies for development and growth of small economies. No parallelism should be drawn between the use of e-commerce by SMEs in developed countries and the possible use of e-commerce as a development strategy for small economies. No new dot-com bubble should be created in the form of a small economy bubble. The realities were very different for small economies, be it the infrastructure, the environment, the domestic policy, or the economies of scale. However, he recognized that there were opportunities to employ e-commerce strategies within the broader scope of a development strategy. Finally, he drew delegations attention to paragraph 2.(k) of Document WT/L//447, which stated that:

"The General Council shall instruct the WTO Secretariat to provide relevant information and factual analysis, inter alia,

(i) on the impact of WTO rules on Small Economies;

(ii) on the constraints faced by Small Economies as well as their shortfalls in institutional and administrative capacities, including in the area of human resources;

(iii) on the effects of Trade Liberalization on Small Economies.

The CTD will also request information and analysis from other agencies and bodies that carry out work on small economies."

21. He asked what the status of this request was, since it would clarify how the future work could be shaped. The small economy Members, co-sponsors of the Document, had taken initiatives and had responded to requests to make their own contribution. Members would continue to see contributions from them, or even a wider group. Nevertheless, he sought some feedback from the Chairman as to the direction of the work in the CTD Dedicated Sessions.

22. The representative of Grenada said that his delegation supported the contents of Document WT/COMTD/SE/W/1.

23. The representative of Guatemala said that reference had been made to the situation small economies and it seemed as though the impression other delegations had was that the problems raised by the small economies were common to all developing countries. It was true that small economies shared many of the problems of developing countries in general. However, he wished to take an example to illustrate in what way the small economies were different from the others. In Guatemala, for example, coffee was the back-bone of the economy. It was the main export and occupied most of the labour. However, no matter what fraction of the production was exported, it would not influence the world coffee prices. The same applied to the labour market. It did not matter if any share of the manpower emigrated. It would make no difference to the domestic salaries. No matter how many workers came back, it would not affect the salary structure. Guatemala was a small economy and

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although it may wish to have an impact on the world economy, changes in the Guatemalan economy made no impact at all.

24. The representative of Barbados reaffirmed his delegation's co-sponsorship of the Document which set out the characteristics of small economies and which identified the consequences or constraints that resulted from those characteristics. It marked the beginning of a process which he hoped would lead to an acknowledgement by the Membership of the peculiar problems faced by small economies and the acceptance of a number of trade-related responses which could address those problems. He said he wished to make a number of comments that were peculiar to Barbados, in the hope they would provide answers to some of the questions which had been raised and show that even though some of the characteristics of small economies were common with larger economies, the issue was the ability of the country concerned to address those concerns. Barbados was a country with a total land mass of 431 square kilometres of which 37 per cent was arable land. Thus, even if the total land mass of Barbados was devoted to agricultural production, it would still have to import a significant amount of agricultural products to meet its domestic demand and to support the tourist industry. Barbados had a population of 269,000 and a total GDP of just over US$2.2 billion, which was significantly smaller than the annual income of even some small companies in developed countries. In addition, as stated in the information provided by the Secretariat for the Committee on Subsidies and Countervailing Measures, Barbados had a share of world trade of less than 0.00 per cent which was smaller than Macao, China. Thus, it was a small economy in spite of the fact that the World Bank regarded its per capita GDP as relatively high.

25. He went on to say that he wished to respond to the comment made by the representative of Chile and referred him to paragraphs 5(a) and 5(b) of the Document which had to be read in conjunction. Subparagraph (b) went some way to explain the reference to highly open economies in (a). Acute dependence on a few export products and few markets meant that small developing countries traditionally experienced economic volatility. That was a real issue. His delegation intended, through various presentations during the coming months, to demonstrate that in determining the level of development of a country and its ability to effectively participate in the multilateral trading system, Members should not focus on the per capita GDP or income but on the degree of structural transformation which had taken place in the economy or which the country in question was capable of achieving over time. The real issue was the ability of small developing economies like Barbados to adapt to changing circumstances which essentially were external, such as to re-allocate resources to meet changes in demand. The issues for consideration should be: the characteristics of small economies; the problems which flew from those characteristics; and the ability or inability of the countries in question to cope with those problems. Barbados reflected all of the characteristics identified in the Document, and as a consequence it was affected by the resulting problems or constraints. Its mall size, small population, narrow resource base, small domestic market, and small businesses were such characteristics. The largest construction company in Barbados was one which had an annual turnover of 20 million $US. As that was the largest, delegations might get an idea of what he was talking about. In Barbados, it was not called small, it was the largest. There was therefore no doubt that the Secretariat, in trying to put a value on Barbados share of trade, had described it as 0.00 as it was so small and insignificant. The economy of Barbados suffered from a limited ability to diversify and the inability to achieve a high degree of integration between the various sectors. The economy was heavily dependent on external trade comprising a few exports to a few market and a large amount of imports, which were significant not only in value but also in variety. The agricultural and industrial sectors had always been dependent on preferential trading arrangements. Without such arrangements, those two sectors would collapse. The domestic market was too small to sustain them and they were not competitive since the businesses involved in both sectors were small and unable to achieve the required economies of scale. They also lacked adequate financial and skilled human resources, and had difficulty in accessing the necessary technology. The easy answer to the problem was to let them collapse since they were uncompetitive. However, the question was where the human and other resources which would be displaced could be reallocated or reabsorbed. This was one of the essential problems of a small economy. It was in this respect that his delegation had begun to see the difference between a small and a large economy.

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26. He continued by saying that when the developed countries had started to experience recession last year, the ensuing discussion was about the measures which the respective governments should implement to stimulate domestic activity. However, when countries like Barbados began to experience recession which, invariably, was caused by external events, there was no policy mix available to stimulate domestic activity to get the economy going again. Instead, the Government of Barbados had to use its wits to survive and to hope that the recession did not last for too long. The problem was made worse as the external sectors, which in the case of Barbados were tourism and financial services also were susceptible to external factors. Not so long ago both these sectors had been negatively affected. One by the events of September 11, and the other by the impact of the "black list". The result of those two events was that the Government of Barbados had to try to regain lost ground in order to maintain even its present level of development. If, for some reason, the economy would be unable to recover quickly from either of these calamities, the economy of Barbados would be seriously affected since it could not rely, as the larger countries could, on the stimulation of the domestic market to compensate for losses on the external market. A new export product had to be found to substitute for the old and that could not be achieved easily which showed how vulnerable Barbados was. Therefore, during the coming months his delegation, in collaboration with the delegations of other small developing economies, would be identifying a number of specific trade-related responses which they wished to see implemented to assist the small economies cope with their peculiar problems. He had taken the advice and studied the development of New Zealand. He had then noticed that the problems New Zealand faced were not similar to those of small economies. They did not stem from the constraint imposed by characteristics that we have identified. In addition, the world today was a different one from the world at the time in which New Zealand had developed. He had studied the results of the 1957 international conference, prior to the creation of the European Communities. He had looked at the papers presented at that Conference by a range of economists. As they studied the development of what they then described as small countries, they had kept making the point that a different world existed then compared to today's world. Meanwhile, it would be helpful if the WTO Secretariat in carrying out the work agreed to by the General Council in its decision on the Work Programme on Small Economies, could also provide information which it had at its disposal on the role of preferences in small economies and what the impact would be if these preferences were phased out and how the human and other idle resources could be absorbed if the affected countries were to avoid massive unemployment and to sustain their present level of development, not to mention the possibility of developing beyond that level.

27. The representative of Canada said that the Document provided by the group of 18 proponents captured the various findings of other organizations and of the Members themselves as far as the challenges of small economies were concerned. Her delegation agreed with the thrust of the analysis and considered the Document a good basis for further discussion in the context of the work plan. However, there were some minor areas in which her delegation did not share the Document's conclusions. Nevertheless, the Document should be further studied and discussed. Her delegation had two points regarding the work before the Committee. First, it was important to focus on the impact of existing rules on small economies with a view to ensuring flexibility in the application of those rules, to avoid unnecessary negative affects on small economies. Second, she highlighted that in the Free-Trade Area of the Americas (FTAA) there was a similar process to that being undertaken in the WTO. There was a Consultative Group on Smaller Economies and her delegation hoped that there would be a sharing of information between the WTO and the FTAA Group. As a final comment she said that her delegation acknowledged the need for all delegations to be present in Geneva and hoped that over time all Members would be represented in Geneva. Her delegation was pleased to have been able to provide some financial support to the Agency for International Trade and Information and Cooperation (AITIC) for it to continue its support to the delegations that were not represented in Geneva.

28. The representative of Trinidad and Tobago said that her delegation was a co-sponsor of the Document. As had been explained, the Document was an attempt to highlight the peculiar problems faced by small economies, and also to respond to the many questions and requests for clarification

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posed by other WTO Members. Many delegations had expressed their support for the Work Programme and had begun to demonstrate their willingness to work in a constructive manner to examine the constraints faced by small economies and to frame responses to those problems. Such responses had to lead to concrete actions and decisions that would help the small economies benefit from their participation in the world trading system. Every time the CTD discussed small economies, delegations kept referring to one or two characteristics of small economies. There was a lack of understanding on the precise point that that the small economies were trying to make. It was not a matter of an earth quake or of dependence of one or two exports, or the small market sizes that affected small economies, it was a combination of all those factors. Many small economies shared the majority of those characteristics. To say that many of the problems were shared by other developing countries and that the definition advanced by the small economies therefore was void, was to miss the point that was being made. The work programme on small economies belonged to the entire membership of the WTO; it was not a programme for only the small economies or which concerned only the small economies. Her delegation said that the current meeting constituted a broad introduction to these issues; an introduction to be transformed into substantive debate at future meetings. Her delegation looked forward to future debates and to the positive contribution that she hoped all Members would bring to the Work Programme.

29. The representative of Jamaica said that her delegation associated itself with the views expressed by the representatives Mauritius, Dominican Republic, Saint Lucia and Barbados. At the Doha Ministerial Conference, Ministers had mandated the establishment of a work programme on small economies to examine issues relating to the trade of small economies with the objective of framing responses to the trade-related issues identified as being necessary for their fuller integration into the multilateral trading system. That mandate was an important step in the recognition of the particular concerns of small economies in terms of the difficulties experienced by them in participating in the global trading system. The multilateral trading system had undergone considerable changes over the past 20 years. Due to the paradigmatic shift in trade regimes at the multilateral, and in particular the national level, small economies had been compelled to make far-reaching adjustments in order to deal with a multilateral trading system marked by a continuing trend toward globalization, market liberalization and increased competition in the market-place. This process of structural adjustment had not been an easy one for countries like Jamaica, given the inherent constraints arising from the small size of the economy. The larger countries with more resources at their disposal, that were able to adapt quickly and successfully to the challenges brought about by a more liberalized market economy, were those that had few, if any, adjustment problems. However, such levels of adaptation and response were not features of a small economy given their levels of vulnerability, high cost structures, the economies of scale, and the limited human, financial and institutional resources available. Those were amongst the many characteristics listed in Document WT/COMTD/SE/W/1, which outlined the fundamental and inherent constraints to economic development in small economies. Her delegation envisaged that the work programme on small economies would be two-fold. It would highlight the main constraints and concerns of small economies and the exact difficulties encountered in seeking to establish more liberal, competitive market regimes and implementing the obligations under the WTO Agreements. It would also determine the manner in which concrete responses to those concerns might eventually be developed and accommodated in the rules governing the multilateral trading system. Her delegation was concerned that, if the impact which those constraints had on small economies' ability to participate effectively in the multilateral trading system were not adequately addressed in the WTO, it could have a negative effect on their ability to realize a smooth transition from a situation of dependence on one or two sectors for survival to an economic structure which was attuned to a more liberal environment.

30. The representative of Saint Kitts and Nevis said that it had been enlightening to hear all the interventions to the discussion. St Kitts and Nevis was the smallest country in the entire Western Hemisphere with a population of only 40,000 inhabitants. St Kitts and Nevis was also dependent on a single commodity, which was sugar, which was exported under preferential arrangements. The country also lay in the path of hurricanes, and had experienced devastating impacts on its industry and on its export earnings, whenever hit by hurricanes. Unfortunately, St Kitts and Nevis was also located

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at sea level and even a small change in the sea level could destroy the coasts and the beaches which were the main attraction for tourists. These challenges and constraints were totally beyond the control of the Government's control. Activities would therefore have to be coordinated to assist small and developing states such a St Kitts and Nevis.

31. The representative of Honduras said that, as a co-sponsor of the Document, his delegation associated itself with what had been said by other delegations recognising the specific characteristics of small economies. He urged all Members to discuss those issues and hoped that the proposal would be discussed thoroughly. As paragraph 35 of the Doha Ministerial Declaration stated, the objective of the work was to frame responses to the trade-related issues identified for the fuller integration of small, vulnerable economies into the multilateral trading system.

32. The representative of Ecuador said that the co-sponsors of the Document on small economies defined many characteristics relevant to the small economies. He referred to paragraph 2 of the Doha Ministerial Declaration, which stated that "international trade can play a major role in the promotion of economic development and the alleviation of poverty" and said that it was important to identify the basic indicators to promote development. At least thirty or so social, environmental, economic and general indicators could be identified. His delegation identified itself with the work programme on small economies. He said that, leaving aside fundamental issues, he pointed to the definition of a small economy as one with few export products and many import products, which actually implied an imbalanced general economy. The different inputs available on that particular subject should be taken into account and inputs could be also be made by the Secretariat.

33. The representative of Norway said that his delegation would continue to support non-resident Members in their activities in the WTO. It was a long-term objective that all Members of the WTO should, eventually have the ability to be permanently represented in Geneva. Second, his delegation appreciated the commencement of the work programme on small economies and the Document presented was a valuable contribution as it formed a good basis future our work. His delegation particularly appreciated that the group had underlined the fact that the objective was not to create another sub-category of WTO Members. A characterization of the problems was important for the understanding of the peculiar situation of small economies and should be carried out in more detail in the further work of the Committee. His delegation was sympathetic to the reference made in paragraph 8 of the Document, concerning the existing rules and what this meant for smaller economies in practice. That was something which should be addressed in more detail at a later stage.

34. The representative of Switzerland said that he wished to highlight the Geneva Week which was a good initiative by the Director-General. AITIC (the Agency for International Trade and Information and Cooperation) was an agency which offered customized assistance to the missions that were not present in Geneva. Steps were being taken to transform that agency into an international organization. Such an approach would help to strengthen AITIC and make it more able to meet its mandate which was to assist its clients, which included the small economies, to increase their ability to have their voices heard and to defend their interest in Geneva and at the WTO, and as far as possible in more global context. An intergovernmental agreement was being prepared to that effect which should be ready by the end of June with a view to convene an intergovernmental conference towards the end of 2002. His delegation welcomed the fact that the financial support base of that organization had been extended, as had been mentioned by the representative of Canada.

35. The representative of Bolivia said that after having read the Document and having heard the comments on it, there was a need to move into a more productive, flexible and participatory mode involving, as far as possible, all Members of the Organization. The next step would be to draw up of a work programme to be submitted to the 5 th Ministerial Conference. That work programme should contain responses, to all the problems defined in the Document before the Committee. His delegation appealed to all Members to play an active role and to contribute to the drawing up of the work programme.

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36. The representative of Papua New Guinea said that he wished to reaffirm his delegations support of the Document WT/COMTD/SE/W/1. Papua New Guinea was an island developing country with a small and vulnerable economy. Although it was a Member of the WTO, his Government had experienced difficulties in using the provisions of the WTO to address its trade-related problems which were exacerbated by their lack of presence in Geneva. The advent of Geneva Week was a good initiative from the Director-General. However, there were 51 other weeks in the year when the Governments of the Pacific Islands countries would not be able to express their views on the many crucial issues that were discussed in the WTO. His Government had realized that it had to establish a representation in Geneva to ensure that its problems in trade could be appropriately addressed by the WTO.

37. The representative of Antigua and Barbuda said that his delegation welcomed that the Geneva Week 2002 had encapsulated the Dedicated Session of the CTD on Small Economies. His delegation supported the Document, WT/COMTD/SE/W/1, and the process concerning small economies as set out in Paragraph 35 of the Doha Ministerial Declaration. His delegation would provide an example of vulnerability as described in paragraph 4(f) of the Document. Antigua and Barbuda was characterised as a small economy. It had suffered from disastrous hurricanes almost every year during the 1990s, which had devastated the islands and caused massive dislocation within the economy. Tourism contributed approximately 70 per cent to the Gross Domestic Product, which was a prime example of vulnerability. It was not difficult to imagine the devastation caused by the direct and in-direct linkages to tourism. That was only one factor. However, his country was exposed to many of the other difficulties outlined in the Document. His delegation looked forward to future work in the area to ensure that there was a smoother process of integration of the small economies into the multilateral trading system.

38. The representative of Surinam said that his delegation fully agreed with the content of the Document.

39. The representative of United States said that she wished to respond to some of the comments made. She agreed that the exercise which was mandated did include the framing of responses. For purposes of precision, she indicated that the thoughts about e-commerce were specific to a variety of options that together, or in conjunction with others, could be part of the responses. During the treatment of the issue of e-commerce in the WTO, there had been a number of discoveries about development. Rather than treating IT-bubbles and dot-coms, there had been discussions about how to use e-commerce in a rational, business-sense manner to help small countries take advantage of markets that were traditionally not close to them. There had been a number of examples on how developing countries had been able to use electronic commerce to achieve economies of scales and develop other types of resources as part of the trading system. One such example was a large developing country that was manufacturing software and exporting it over the Internet. This country was quite exceptional in its competition with other developed countries. It seemed that small countries should, in addition to a number of responses that had been suggested for small economies, not foreclose the option of e-commerce. With respect to the Services negotiations, and other activities in WTO it would be important to ensure that small economies' interest were at the center of this work. Her reference to success stories was specific to e-commerce, not to the overall problem. The small economies work programme was not about pointing out all the success stories, but to point to the problems, in order to find a way to frame suitable responses. The success stories were about how to address similar situations, and of sharing ideas among the delegations represented. It was therefore opportune that the First Dedicated Session had taken place during the Geneva Week. Delegations were thus able to increase their knowledge with information coming directly from the those delegations who had the specific concerns.

40. The representative of Mauritius said that he would be grateful if the Chairman could address the question concerning the number of Dedicated Sessions he proposed to hold. He was also pleased that the non-Geneva based delegations had taken the opportunity to take the floor and voice their concerns.

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41. The representative of Saint Lucia said that he had been reassured to have heard the clarification from the representative of the United States when she had spoken about success stories. Nevertheless, there was no success in the small economies, they were actually just concern about survival. Regarding the provision of technical assistance, as also in the area of special and differential treatment in trade mechanisms and regulations, a "one size fits all" approach would not be appropriate. There had to be a greater degree of sophistication and understanding of the specific deficiencies which such countries faced and then greater imagination to deal with them. There was support to the small economies through AITIC. However, the non-residents needed something more than what AITIC was providing. AITIC could unfortunately not replace the real deficiency that the lack of physical presence represented. Actual representation and participation in the day-to-day work of the WTO was essential.

42. The Chairman said it had been very useful to hear the views of Members who had intervened on the subject, as it was from these views that the Committee could draw suggestions and ideas on how to proceed further. He said he had been impressed by the manner in which many of the non-residents had spoken and participated. It was clear that the Geneva Week had provided awareness of the negotiating process. He said that delegations had appreciated the Document that had been submitted by the group of proponents. It seemed that there were many elements which were acceptable in that Document. This was a good sign to begin with. However, questions had been raised about a variety of issues which also had to be addressed. It was clear that there would be a need to consult further on the manner is which to proceed with developing a work programme on small economies. The Committee had the mandate to do this and it was his intention to go as far as he could to complete the work that had been mandated by the Ministers at the Doha Ministerial Conference and then further articulated in the General Council. He would be consulting with delegations on ways to proceed. He mentioned that the question of the Secretariat providing professional assistance in some areas had also been raised. The delegation of Mauritius had, through a letter, asked the Secretariat to compile a list of references to small economies in various WTO Documents and the Secretariat had prepared a first draft of such a list. The delegation of Mauritius had promised to look into this compilation by the Secretariat and how it could be somewhat fleshed out. He proposed that, through discussions between proponents of the small economy issues and another interested delegations, it should become clear what the Secretariat was being asked to provide. He requested the proponents of the work programme to take the comments made from the floor into account and develop the Document in the direction of a road-map which could be presented at the July 2002 Dedicated Session.

43. He continued by saying that the number of sessions would, according to past practice, depend on the number of formal sessions of the CTD. It was a practice, not a rule. A number of constraints had been placed on the programming of meetings. However, he assured delegations that, after each Session of the CTD, there would be a Dedicated Session devoted to small economies. In addition, when the need arose, he would attempt to find the time to meet separately, as well. With those constraints in mind, and assuming that the 5th Ministerial Conference in Mexico would be around September-October 2003, delegations could expect that there would be at least four other Dedicated Sessions of the CTD, maybe even five. However, he requested those intending to present Documents, to do so as early as possible. This would give delegations a better chance to consider all options and proceed further on developing a work programme for small economies on the subject. He intended to call another Dedicated Session directly after the upcoming regular session of the CTD, which was scheduled for Monday 1 July, 2002.

44. It was so agreed.

C. OTHER BUSINESS

45. The Chairman reminded delegations that the provisional date for the following meeting was Monday, 1 July 2002.

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46. No other item was raised under Other Business.

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