WTO delves deep into suffering of landlocked developing countries

CAIRO – 29 December 2021: The world has 32 landlocked developing countries that represent 1.1 percent of global trade, with half of them being African. The World Trade Organization (WTO) issued in December a report on ways of "easing trade bottlenecks" for such states.

Impediments  

The organization identifies obstacles facing the trade of landlocked developing countries as follows: multiple clearances and declarations at customs; inefficient border infrastructure; transloading from and between different modes of freight; security controls on transit routes; lack of digitalization and ICT equipment; and, health and safety measures in the wake of COVID-19.

The report elaborates that given that landlocked countries are exporters of commodities, mostly raw materials, they face another key obstruction. And, that is their products are not competitive due to the higher costs of transportation.

The WTO further showcases that landlocked developing countries "on average pay more than double in transport costs than transit countries and experience longer times to send and receive merchandise from overseas markets." As a consequence, investors are discouraged, and growth is crippled.

Solutions

Speaking of trade facilitation, the organization urges creating transit corridors, which offer both soft infrastructure, such as easing bureaucratic measures, and hard infrastructure in the form of decent means of freight transportation and crossings.

On the bright side, there is a very good example of such corridors in Africa, and it is dubbed the Northern Corridor. That is "a multimodal trade route in Africa linking Burundi, Rwanda and Uganda and the eastern regions of the Democratic Republic of the Congo with the port of Mombasa, in Kenya."

The corridor was launched in 2014, reducing transit duration from 284 hours in 2015 to 90 hours in 2019. Nevertheless, the COVID-19 pandemic raised that figure to 378 hours by January, 2021, wiping out out progress made toward the 45-hour target.

With regard to the benefits transit/coastal countries reap by better connecting with landlocked ones, they become more attractive for shipping lines due to the rise of trade volume passing through them, which would in turn push shipping costs down.

According to the WTO, landlocked developing countries lost $15.7 billion in export revenues in 2020, and the value of their imports was down by 24 percent from $68.3 billion in 2019 to $52 billion.