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Midterm Review of the Implementation of the Vienna Programme of Action for LLDCs for the Decade 2014-2024

in the Euro-Asian RegionUNCC, Bangkok ,11-12 February, 2019

Session 4: International Trade and Trade Facilitation

Dr. Yann DuvalChief, Trade Policy and Facilitation Section, Trade, Investment and Innovation Division, ESCAP

LLDC members of ESCAP: Afghanistan, Armenia, Azerbaijan, Bhutan, Kazakhstan, Kyrgyzstan, Lao PDR, Mongolia, Nepal, Tajikistan, Turkmenistan, Uzbekistan

Source:

VPOA Priority III objectives

Priority III (a –Trade)a) Increase the participation of LLDCs in global trade, with a focus on substantially increasing exports;b) increase the value added and manufactured exports with the objective of diversifying their markets and products;c) Strengthen economic and financial ties with countries in the region so as to gradually and consistently increase the share of landlocked developing countries in intraregional trade.Priority III (b –Trade facilitation)a) Simplify and streamline border crossing procedures with the aim of

reducing port and border delays; b) improve transit facilities and their efficiency with the aim of reducing transaction costs;

c) ensure that all transit regulations, formalities and procedures for traffic in transit are published and updated in accordance with the Agreement on Trade Facilitation of the World Trade Organization.

Presentation outline

I. How far along are Asia-Pacific LLDCs based on Priority III(a, b) objectives?i. Participation in global tradeii. Diversification of export markets and products iii. Integration to global and regional economyiv. Trade costsv. Implementation of trade facilitation agreements

II. Emerging challenges III. Way forward

Participation in global trade

Trade has recovered from the three-years consecutive declines, but the momentum may not sustain.

Merchandise trade and trade balance of Asia-Pacific LLDCs • In 2017, trade by Asia-Pacific LLDCs registered positive growth for the first time in three years.

• Trade value grew 19.6% (exports) and 7.3% (imports)

• Shares in global exports and imports remain negligible: 0.53% (exports) and 0.6% (imports)

• Global and regional outlooks suggested that trade growth may not keep its momentum in 2018-2019

• Trade volume by Asia-Pacific region grew only 3.8% for exports and 5.5% for imports in 2018.

• In 2019 this growth will reduce to 2.3% for exports and 3.5% for imports (APTIR2018).

Source: ESCAP's calculation based on mirror data from UNCOMTRADE (accessed January, 2019).

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Import Export Trade balance

Export diversification

Export performance of Asia-Pacific LLDCs is driven by fuel-commodity exporters.

Export performance of the group is mainly driven by trade in fuel commodities.• Fuel accounted for

56% of total exports by the group.

• Mineral and metal, 19.2%

• Manufactured products, 19.5%

• Agriculture, 5.4%

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Exports of agricultural products Exports of minerals and metalsExports of fuels Exports of manufacturing productsTotal Exports

Export performance by, product groups


More than 60% of exports go to EU and China

• EU remains the most important export market (37%), followed by China (26%) and Russian Federation (8.2%)

• Since 2009, exports to China significantly increased, while the share of exports to the Russian Federation continuously declined.

• However, small LLDCs depend heavily on larger neighboring economies (see next slide).0%

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Rest of the worldOther Asia-Pacific economies

United StatesTurkeyThailandRussian FederationIndiaEuropean Union (27)

China


Figure 5

Major export partners, 2017

Pakistan

India

India

India

India

Nepal

Thailand

EU EU

EU

EU

EUEU

EU

EU EUEU

US

Russia

Russia

Russia

Russia

Russia

China

ChinaChina

China China

China

Georgia

Switz.Switz.

Switz.

Switz.

Switz.

CanadaKazakh.

Kazakh.

Turkey

Turkey

Turkey

TurkeyAlgeria

Others OthersOthers

OthersOthers Others

Others Others Others OthersOthers Others

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Afghan

istan

Bhutan

Nepal

Armen

iaAzer

baija

nKaza

khsta

n

Lao PDR

Mongo

liaTurk

menist

anKyrg

yzsta

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Tajikis

tanUzb

ekist

an

Expo

rt sh

ares


Figure 6

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2012 2017

Export diversification (number of products)

Figure 8

Export diversification (number of markets)

Figure 9

Source: ESCAP’s calculation based on data from Trade Outcomes Indicators available from WITS (accessed in January, 2019).

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Services ex

ports (USD

Billions)

Services exports by Asia‐Pacific LLDCs

Services share

Services export value The importance of services exports increased from 10% to 17% during 2012-2017.

The shares of services exports are higher than 30% in Afghanistan (construction), Armenia, (travel), Kyrgyzstan (travel), and Nepal (travel).

However, Asia-Pacific LLDCs represent only 0.4% of global services exports. The share remained unchanged from 2012 to 2017.

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Services export share, by country

2012 2017

Services Exports

Source: Calculations using data from WTO

Integration to global and regional economy

ESCAP member State/Associate member WTO membership status

Date of Ratification

Afghanistan Member 29 July 2016

Armenia Member 20 March 2017

Azerbaijan Observer Not applicable

Bhutan Observer Not applicable

Kazakhstan Member 26 May 2016

Kyrgyzstan Member 6 December 2016

Lao People’s Democratic Republic Member 29 September 2015

Mongolia Member 28 November 2016

Nepal Member 24 January 2017

Tajikistan Member Not yet ratified

Turkmenistan Not a member Not applicable

Uzbekistan Observer Not applicable

WTO membership status (and ratification of the WTO Trade Facilitation Agreement)

Source: WTO (updated in January, 2019).

Country Name Number of FTAs Afghanistan 3 (ECOTA, SAFTA, India)Armenia 14 (CISFTA, EAEU, EAEU-Viet Nam, EAEU-Islamic Republic of Iran, EAEU-China, Georgia, Kazakhstan,

Kyrgyzstan, Moldova, Russian Federation, Tajikistan, Turkmenistan, Ukraine, Belarus)Azerbaijan 12 (CISFTA, ECOTA, Georgia, Kazakhstan, Belarus, GUAM, Moldova, Russian Federation, Turkmenistan,

Ukraine, Uzbekistan, Islamic Republic of Iran)Bhutan 2 (India, SAFTA)Kazakhstan 20 (Armenia, Azerbaijan, CISFTA, CEZ, EAEC, ECOTA, EAEU, EAEU-Viet Nam, EAEU-Islamic

Republic of Iran, EAEU-China, Georgia, Kyrgyzstan, KRB, Moldova, Russian Federation, Tajikistan, Ukraine, Uzbekistan, Belarus, Serbia)

Kyrgyzstan 14 (Armenia, Belarus, CISFTA, EAEC, ECOTA, EAEU-Viet Nam, EAEU-Islamic Republic of Iran, EAEU-China, Kazakhstan, Moldova, Russian Federation, Tajikistan, Ukraine, Uzbekistan)

Lao PDR 9 (AFTA-ATIGA-AFAS, APTA, ASEAN-China, ASEAN-India, ASEAN-Japan, ASEAN-Republic of Korea, ASEAN-AU-NZ, ASEAN-Hong Kong, China, Thailand)

Mongolia 1 (Japan EPA)Nepal 2 (SAFTA, India)Tajikistan 10 (Armenia, CISFTA, EAEC, ECOTA,

Kazakhstan, Kyrgyzstan, Russian Federation, Belarus, Ukraine, Uzbekistan)Turkmenistan 9 (Armenia, Azerbaijan, CISFTA, ECOTA, Georgia, Russian Federation, Ukraine, Belarus, Moldova)Uzbekistan 11 (Azerbaijan, CISFTA, ECOTA, Georgia, Kazakhstan, Kyrgyzstan, Moldova, Russian Federation, Tajikistan,

Ukraine, Belarus)

Source: Compiled from Asia-Pacific Trade and Investment Agreements Database (APTIAD) (accessed January, 2019).

Participation of LLDCs in preferential trade agreements

Agreements in red are the FTAs signed since 2017

0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Mongolia

Turkmenistan

Azerbaijan

UzbekistanKazakhstan

Kyrgyzstan

Nepal

Tajikistan

ArmeniaLao PDR

Bhutan

Afghanistan

Export share Import share

Source: Derived from Asia-Pacific Trade and Investment Agreements database (APTIAD) using WITS database (accessed January, 2019).

Trade coverage under Preferential Trade Agreements (PTAs):Share of exports and imports with PTA partners (2017)

Improvement in trade facilitation

Implementation of WTO Trade Facilitation Agreement: Notifications of LLDCs and selected transit countries (%)

Source: World Trade Organization : TFA database

Trade facilitation and paperless trade implementation performance of LLDCs

Source: UN Global Survey on Trade Facilitation and Paperless Trade Implementation 2017.

UNTFSURVEY.ORG

Source: ESCAP (2017), based on UN Global Survey on Trade Facilitation and Paperless Trade Implementation 2017.

Implementation of different groups of trade facilitation measures

Emerging challenges and implications to Asia-Pacific LLDCs

Indirect impacts from the US-China trade tensions

Source: APTIR 2018

Risk Index Figure 13

Opportunity IndexFigure 14

The risks from slowdown of the Chinese economy and exports.

The opportunity from redirected trade and investment.

Tariffs remain low, but non-tariff measures are on the rise.

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Effectively applied tariffs and non-tariff measures initiated in Asia and the PacificFigure 15

Source: ESCAP calculations based on data from World Bank (2018). World Integrated Trade Solutions. (accessed 12 February 2018).

Way forward

• Dealing with fundamental bottlenecks:• limited manufacturing capacity and export diversification, • limited and low quality infrastructure, • limited stock of human capital,• high trade and transit costs because of cumbersome border

crossing documentation, regulatory requirements and poor logistics performance

• Building immunity to external shocks:• the projected slowing down of the global economy,• volatility in commodity prices, • growing protectionism• indirect risks from trade tensions.

• Enhancing integration into global and regional economy:• expediting the process of WTO accession (for non-WTO members

LLDCs),• considering unilateral liberalization in goods and services,• as well as participation in deeper plurilateral integration

(“economic partnerships”) agreements• accelerating implementation of trade facilitation and digitalization

measures, • including by ratifying the WTO Trade Facilitation Agreement, • as well as engaging in regional and sub-regional initiatives on trade

digitalization such as The Framework Agreement on Facilitation of Cross-border Paperless Trade in Asia and the Pacific (UN treaty adopted at ESCAP in 2016)

For more information, please visitwww.unescap.org/publications/asia-pacific-trade-and-investment-report-2018APTIR Country briefs are available for selected LLDCs:ArmeniaAzerbaijanKyrgyzstanLao PDRMongoliaNepalUzbekistan

THANK YOU

WWW.UNESCAP.ORGUNESCAPUNESCAPUNESCAPUNITEDNATIONSESCAPUNITEDNATIONSESCAP

Additional slides

Export structure of major fuel exporting LLDCs, 2017

Figure 3

Export structure of other LLDCs, 2017

Figure 4

Mineral fuel/lubricants

71.08%

Manufactured goods13.62%

Crude mater.ex food/fuel6.27%

Chemicals/products n.e.s4.79%

Export concentration of Asia-Pacific LLDCS


Mineral fuel/lubricants47.59%

Crude mater.ex food/fuel13.86%

Manufactured goods13.58%

Commodities nes11.20%

Food & live animals4.85%

Chemicals/products n.e.s4.66%

(Azerbaijan, Kazakhstan, Turkmenistan)(Afghanistan, Armenia, Bhutan, Kyrgyzstan, Lao PDR, Mongolia,

Nepal, Tajikistan, Uzbekistan)

Export structure of Asia-Pacific LLDCs, 2017 (in %)

Source: ESCAP’s calculation based on mirror data from UNCOMTRADE (accessed February, 2019)

Product group Afghanistan Armenia Azerbaijan Bhutan Kazakhstan Kyrgyzstan Lao PDR Mongolia Nepal Tajikistan Turkmenistan UzbekistanAnimal/veg oil/fat/wax 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0 0.1 0.0 0.0 0.0Beverages and tobacco 0.0 11.3 0.1 1.6 0.2 0.7 0.6 0.0 9.4 0.1 0.0 0.3Chemicals/products n.e.s 0.4 1.0 0.9 12.6 5.1 0.7 2.8 0.2 5.6 0.3 2.0 10.8Commodities nes 0.5 7.0 0.9 0.2 1.1 49.8 18.9 11.1 0.9 15.3 0.0 41.7Machinery/transp equipmt 2.0 1.6 0.3 1.2 0.7 3.1 6.5 0.2 1.5 2.3 0.4 2.5Food & live animals 56.2 5.4 2.3 2.9 1.5 9.1 10.0 2.9 14.0 6.9 0.1 8.0Mineral fuel/lubricants 7.2 0.5 93.6 14.7 68.7 7.2 0.1 42.2 0.2 0.0 90.9 9.0Crude mater.ex food/fuel 29.3 40.7 0.4 7.6 6.6 20.6 38.1 40.7 1.4 41.9 2.8 3.9Manufactured goods 3.3 24.8 1.3 58.6 15.8 6.2 4.6 1.7 39.7 29.3 3.5 20.4Cork/wood manufactures 0.0 0.0 0.0 0.6 0.0 0.0 0.6 0.0 0.1 0.0 0.0 0.0Iron and steel 0.0 6.1 0.3 56.9 5.7 0.3 0.0 0.0 4.4 0.0 0.0 0.0Leather manufactures 0.7 0.1 0.1 0.0 0.1 2.2 0.0 0.3 1.3 0.8 0.1 0.4Metal manufactures nes 0.1 0.2 0.0 0.0 0.1 0.1 0.2 0.1 1.7 2.5 0.0 0.4Non‐ferrous metals 0.0 12.4 0.7 0.6 9.7 0.8 3.2 1.1 1.4 20.9 0.0 9.6Non‐metal mineral manuf. 1.1 5.9 0.1 0.5 0.1 1.6 0.2 0.0 0.4 0.6 0.0 0.3Paper/paperboard/article 0.0 0.0 0.0 0.0 0.0 0.4 0.0 0.0 0.8 0.0 0.0 0.0Rubber manufactures nes 0.1 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.1 0.0 0.0Textile yarn/fabric/art. 1.4 0.0 0.2 0.0 0.1 0.2 0.3 0.2 29.7 4.4 3.4 9.6Miscellaneous manuf arts 1.0 7.7 0.1 0.8 0.3 2.6 18.4 1.1 27.2 3.9 0.3 3.4Building fixtures etc 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0Furniture/furnishings 0.0 0.1 0.0 0.0 0.0 0.2 0.6 0.0 0.1 0.0 0.0 0.0Travel goods/handbag/etc 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.0 0.8 0.0 0.0 0.0Scientific/etc instrumnt 0.3 0.4 0.0 0.0 0.0 0.0 0.1 0.0 0.1 0.0 0.0 0.0Photographic equ/clocks 0.0 0.2 0.0 0.0 0.0 0.1 0.2 0.0 0.0 0.0 0.0 0.0Footwear 0.1 0.0 0.0 0.0 0.0 0.1 2.0 0.0 1.8 0.0 0.0 0.1Apparel/clothing/access 0.3 6.2 0.0 0.0 0.0 1.5 14.7 1.0 15.9 3.5 0.3 3.1Misc manufactures nes 0.2 0.7 0.1 0.7 0.2 0.6 0.7 0.1 8.5 0.3 0.0 0.2

Pakistan

US

US

IndiaIndia

India

China

China

China

China

ChinaChina

ChinaChina

China China China

Russia

Russia RussiaRussia

Russia

Russia

Russia Russia

EU

EU

EU

EU EU

EUEU

EUEU

Turkey Turkey

Thailand

Thailand

Kazakh.

Kazakh.Kazakh.

Kazakh.

Japan RoK

Others OthersOthers

OthersOthers Others Others Others Others

Others Others Others

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Bhutan

Nepal

Afghan

istan

Lao PDR

Kyrgyz

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Tajikis

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Mongo

liaUzb

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iaAzer

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Impo

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ares

Major import partners, 2017


Figure 7

• Armenia’s imports from China account for 6.2% of its totalimports from the world, while its exports to China accountfor 17.4% of its total exports to the world.

• Kazakhstan’s imports from China account for 34.5% of itstotal imports from the world, and its exports to Chinaaccount for 16.6% of its total exports to the world.

• Kyrgyzstan’s imports from China account for 64.4% of itstotal imports from the world, whilst its exports to Chinaaccount for 7% of its total exports to the world.

EAEU-China FTA signed in 2017 is an important one because of significant trade with China, especially on import side.

Red is when a country has higher trade cost than AP average.

Average trade costs of LLDCs with Asia-Pacific sub-regions (2016)

ENEA NCA Pacific SSWA SEAAfghanistan 404.3 195.7 362.1 144.8 401.1Armenia 345.3 215.5 417.2 485.1 441.6Azerbaijan 392.7 142.9 383.8 198.9 366.0Bhutan (2012) 362.5 - 547.3 202.4 351.7Kazakhstan 181.9 134.0 286.0 213.9 429.1Kyrgyz Republic 314.6 171.3 413.4 259.0 484.2Lao PDR 211.6 363.2 299.0 296.0 287.3Mongolia 187.1 317.1 259.2 402.2 349.8Nepal (2015) 318.7 1009.7 240.0 263.6 431.9Tajikistan (2015) 237.8 220.5 693.8 232.2 718.8Turkmenistan (2000) 312.6 125.5 - 158.5 422.8Uzbekistan 213.1 134.6 629.7 225.2 356.8Asia-Pacific LLDC average 290.2 275.5 412.0 256.8 420.1Asia-Pacific average (2015) 204.9 335 291.7 294.2 286.7

Source: ESCAP-World Bank Trade Cost Database (accessed January, 2019).

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