WTO approves integration of small economies to global value chains

Multilateral trading body WTO has approved the integration of small vulnerable economies (SVEs) into the global value chains (GVCs).

The draft decision agreed by the Ministerial Conference convening as a General Council on November 30 has been forwarded for adoption by ministers which will be meeting later this month for the 10th Ministerial Conference or the MC10 in Nairobi, Kenya.

“We reaffirm our commitment to the Work Program on Small Economies and take note of all the work conducted to date,” the draft decision posted on its website stated.

“We take note of the work carried out since 2013, including that on the challenges and opportunities faced by small economies when linking into global value chains in trade in goods and services, and instruct the Committee on Trade and Development (CTD) to continue its work in Dedicated Session under the overall responsibility of the General Council,” the WTO decision further stated.

In addition, the WTO also instructed the Dedicated Session to consider in further detail the various submissions that have been received to date, examine any additional proposals that members might wish to submit and, where possible, and within its mandate, make recommendations to the General Council on any of these proposals.

The General Council shall direct relevant subsidiary bodies to frame responses to the trade-related issues identified by the CTD with a view to making recommendations for action, it added.

The WTO Secretariat was also instructed to provide relevant information and factual analysis for discussion among Members in the CTD's Dedicated Session, inter alia, in the areas identified in item k of paragraph 2 of the Work Programme on Small Economies and, in particular, to continue its work on the challenges and opportunities experienced by small economies when linking into global value chains in trade in goods and services.

“We request the Secretariat to also conduct work on the challenges small economies experience in their efforts to reduce trade costs, particularly in the area of trade facilitation,” it stated.

The CTD in Dedicated Session shall continue monitoring the progress of the small economy proposals in WTO bodies and in negotiating groups with the aim of providing responses, as soon as possible, to the trade-related issues identified for the fuller integration of SVEs in the multilateral trading system.

The draft decision reaffirms members' commitment to the WTO work program on small economies, adopted in 2002.

SVEs account for only a small percentage of world trade. WTO members recognize that these economies, while not forming an official sub-category of members, face specific challenges due to their small size and the distance which separates them from their key trading partners.

The SVEs have made several proposals in the Doha Round negotiating groups and in other WTO bodies, mainly regarding agriculture, industrial goods, services, rules, including fisheries subsidies, and trade facilitation.

WTO Director-General Roberto Azevedo, who spoke at the meeting of APEC Ministers Responsible for Trade (MRT) in Boracay in May this year, had committed to push the APEC MSME (micro small medium enterprises) Agenda at the WTO to ensure implementation of specific measures that will put this sector into the GVCs.

Already, the Philippines has been designated as WTO vice-chair for having championed the cause of MSMEs during the recent APEC Leaders’ Meeting in Manila. Since APEC is a non-binding cooperation it needs the authority of the WTO to turn its initiatives into reality.

During the Boracay meeting, APEC trade ministers approved a Boracay Action Agenda which strongly pushed for the MSME agenda into the front and center of APEC.

In the Philippines, MSMEs account for 99 percent of total businesses in the country. This sector accounts for twothirds of total employment. But in terms of value, the MSME sector contributes only a third of the country's GDP.

"To attain inclusive growth, we make sure MSMEs thrive," said Trade and Industry Secretary Gregory L. Domingo. This is the reason, he said, the government has been putting in and implementing lots of support and interventions for MSMEs.

For instance, the government has enacted some measures like the Go Negosyo Act, which has paved the way for the establishments of Negosyo Centers all over the country to assist would be entrepreneurs.