World Trade Report 2014 and the LDCs

There is an apparent dissonance in the two recent reports of World Trade Organisation (WTO) on how trade is functioning or being facilitated in the developing world. While the just-released World Trade Report 2014 records considerable progress of the developing world, including that of the least developed countries (LDCs), attributing much of the attainments to WTO initiatives, the Annual Report on LDCs' market access (WT/COMTD/LDC/W/59) shows that the scenario is not really so.
The World Trade Report 2014 claims that the WTO has played a key role in helping developing countries adjust to four recent trends that have considerably altered the relationship between trade and development. The Report argues that the WTO has enabled developing countries to take advantage of reaping opportunities as well as adapting to challenges and mitigating risks arising from these trends. According to the Report, WTO has done so by ensuring that countries take binding commitments in order to consolidate their trade policies, by providing flexibilities that better allow developing countries to undertake such commitments and by facilitating technical assistance to build trading capacity within those economies. Taking stock of the global trade scene for more than a decade, the Report shows how trade contributed significantly to economic development since 2000. Trade has allowed many developing countries to benefit from the opportunities created by emerging new markets, to integrate into the world market through global value chains at lower costs, and to reap the rewards from higher world commodity prices. There is no denying the basic merit of this statement, given that it is based on the cumulative gains of trade over a pretty long period of time. WTO Director-General Roberto Azevêdo, however, is cautious when he says, "The potential of trade in supporting development has not yet been fully realised."
Now, what are the four trends? These, one may find, are rather too generalised, though not sweeping in nature. The trends identified, are:
- rise of the developing world;
- expansion of global value chains;
- higher prices of commodities; and
- increasingly global nature of macroeconomic shocks.
 The Report has attempted to explain the aforementioned trends at some length. About the rise of the developing world, it states that incomes in developing economies, including those of the LDCs, have been converging with those of rich countries. Since 2000, gross domestic product (GDP) per capita of developing countries has grown by 4.7 per cent. The share of developing countries in global trade rose from 33 per cent to 48 per cent during this period with its multiplier impact on poverty reduction and a host of other societal developments. The successes have been attributed largely to the increasingly active participation of the developing countries in global value chain (GVC). The Report illustrates that developing countries now account for half of the trade in intermediate goods - which is a standard measure of global value chains as well as an evidence that participation in GVCs is associated with higher levels of productivity and income.
The rise in commodity prices (food, energy, metal etc.), according to the Report, has provided both opportunities and challenges. Countries having capacities to meet demands have benefited. On the other hand, rising prices of agro products while benefiting the producing countries have caused difficulties for net agro-product importing countries. The synchronisation of downswings and upswings across the world, according to the Report, illustrates the strong inter-connectedness of economies through trade and financial links.
As already mentioned, the World Trade Report 2014, while reflecting on the developing world's trade scene has conveniently chosen a period extending more than a decade. But when it comes to taking stock of things over a shorter time span, the findings are at times gloomy, especially for the LDCs. The Annual Report presented by the WTO secretariat on LDCs' market access reveals that although exports of goods and services from LDCs increased by 5.2 last year (2013), their total share in world trade remains marginal. The LDCs also face a higher trade deficit as their imports increased more than their exports in 2013, according to the Secretariat Report. Moreover, LDC exports are concentrated in a handful of products and sectors. The report provides an overview of the market access for LDC products in developing and developed economies as well as the non-tariff, sanitary-phyto sanitary measures that severely affect access to these markets. The Report also records concerns expressed by the LDC group many a time on the difficulties for availing preferential access through fulfillment of stringent rules of origin requirements. LDCs' grievances over poor delivery of the Aid for Trade (AFT) programme has also figured in the Report.
So, until the LDC perspective is taken into account independently, the reality will not surface with its true colours. True, the world is no longer where it was a decade ago, nor are the LDCs. But a starker truth is that much of the LDCs' difficulties in the uneven playing field emerges from non-fulfillment of the promises they are often flowered with - promises they have no choice but to believe in.

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