A forum on "Export Competitiveness: Increasing Developing Countries' Participation in Dynamic and New Sectors of International Trade" was held in Rio de Janeiro on 7 June 2004. The purpose of the forum was to discuss how to generate and capture development gains from international trade and trade negotiations through greater participation by developing countries in world trade in general, and in dynamic and new sectors in particular. The forum was intended to shed light on the main factors affecting export performance by focusing on some practical cases in order to provide insights into how policies could be developed in a more coherent manner to lift the export performance and development of developing countries. Three key aspects of policy were discussed: (a) how to lift supply capacity, (b) how to obtain greater diversification through value added, and (c) market access/market-entry conditions. These were examined with reference to a number of specific sectors, as well as through a number of cross-cutting issues. The sectors discussed were poultry, fruit and juices, cotton, wood and wooden furniture, electronics, and ICT services, with representatives from the Brazilian private sector as well as overseas participants.

Determinants of export performance

The determinants of export performance can be split up into internal and external factors, which are of different significance for different sectors, and also vary over time and with the stage of development. External factors are related to market access and entry conditions and other factors affecting import demand. Speakers drew attention to tariff peaks and escalation, and also emphasized the growing importance of measures such as anti-dumping and, for food products, particularly SPS regulations that had to be met to penetrate major markets. However, conforming to international standards, for example those set by ISO, was also important in high-technology areas, including electronics and ICT services. Developed country subsidies made it more difficult for developing countries to export products such as cotton, and this had a direct, negative effect on the poor in Africa and other countries. Market structures in production and trade were also another factor that could affect developing countries&apo; capacity to enter areas of production and to obtain fair returns from trade. Transport costs were particularly important in a number of cases.

Internal factors related mainly to supply-side conditions, which are affected by natural and human resources as well as access to capital. A number of discussants emphasized the importance of economic policy and of institutional factors. Some speakers drew attention to the positive role of government in their countries through supportive trade and industrial policies. Foreign direct investment could be important in providing access to technology leading to productivity gains, as well as providing a link to international value chains. The right kind of investment policies could also lead to the creation of forward and backward linkages. Several speakers underlined the importance of an educated workforce in moving into higher technology areas and in achieving greater domestic value added in design and production.

Policy thrusts and the role of the trading system

The forum underlined the importance of four policy thrusts: (a) creating a good investment climate and attracting development-oriented FDI; (b) building supply capacity and competitiveness through sound and supportive macro, sectoral and enterprise-level policies; (c) merging public and private objectives within a general development-deepening oriented framework by increasing genuine collaboration between the spheres; (d) effectively managing integration with the global economy. An important lesson of the successful experiences was that developing countries themselves needed to take the initiative to make the appropriate strategic policy choices, based on a realistic assessment of actual and potential comparative advantage of each country, not only in each sector but also in the entire value chain.

Effective and expanded market access and market entry into the premium markets are vital to the success of developing countries in entering and benefiting from the dynamic and new sectors. Current WTO negotiations provide an important opportunity to address a number of key market access issues relevant for developing countries&apo; participation in dynamic and new sectors, such as tackling high tariffs, and tariff peaks and escalation facing items of export interest to developing countries; meaningful reform in agriculture; liberalization of services sectors and modes of supply of export interest to developing countries, particularly Mode IV of the GATS; adequate and operational special and differential treatment provisions; and effectively addressing problems arising from the application of measures under SPS, TBT and ADM provisions.

South-South trade and regional economic and trade arrangements could also provide a supportive environment for entering dynamic and new sectors. One such example was the Wood and Furniture Production Chain Competitiveness Forum, which involved all MERCOSUR members in a collaborative effort aimed at improving competitiveness, a balanced distribution of value added, and greater complementarities in regional productive sectors.

An important conclusion of the forum, illustrated by the various sectoral experiences presented, was that all relevant factors of export performance should be dealt with contemporaneously, although their relative significance varied from country to country and sector to sector. What was important for any one country or sector also changed over time. For this reason, the forum concluded that there was a need to continue to work to understand the issues and to suggest possible policy options that could usefully be considered by individual countries and the international community to help developing countries create and take advantage of opportunities for trade, including in the context of dynamic and new sectors.