Statement by

Anwarul K. Chowdhury

United Nations Under-Secretary-General
and High Representative for the
Least Developed Countries,
Landlocked Developing Countries
and Small Island Developing States
Secretary-General of the
International Ministerial Conference

At the
Opening session of the
Latin American Regional Meeting of Landlocked and Transit Developing Countries on Transit Transport Cooperation

Asuncion, 12 March 2003

His Excellency the President,
His Excellency the Foreign Minister,
Distinguished delegates,
Ladies and gentlemen,

Allow me at the outset to express my sincere thanks for the warm welcome and gracious hospitality extended to me since my arrival in your beautiful country of attractive natural beauty and rich cultural heritage. I bring with me warm greetings and best wishes of the Secretary-General of the United Nations, Mr. Kofi Annan,
for this important event, which is the very first regional preparatory meeting being organized as part of the International Ministerial Conference of Landlocked and Transit Developing Countries next August in Almaty, Kazakhstan. On his behalf and as the Secretary-General of the Conference I would like to pay tribute to the people and Government of Paraguay and to you personally, Mr. President, for the excellent initiative and leadership in organizing the Latin American Regional Meeting of Landlocked and Transit Developing Countries at the ministerial level in Paraguay. My special thanks go to Foreign Minister Moreno Ruffinelli for his advice and guidance in this regard. My dear colleague Ambassador Loizaga has given us unstinted cooperation and worked tirelessly for the success of the Meeting. I am very happy for the presence of my eminent colleague, ECLAC Executive Secretary Jose-Antonio Ocampo. Participation of UNCTAD and other multilateral organizations is testimony to their substantive contribution to the preparation of this Meeting.

Today's Meeting presents a unique opportunity for a serious dialogue between Bolivia and Paraguay, two landlocked countries in the region, and their transit neighbours aimed at improving transit systems in the region.

Mr. Chairman,

The basic developmental disadvantages of landlocked developing countries are linked to their geographical handicap. The lack of territorial access to the sea, remoteness from major international markets, inadequate transport infrastructure,
the cumbersome procedures for transit imply that these countries have to bear additional costs for their external trade transactions. The United Nations has long recognized special needs of this group of countries. It was little over forty years ago when the General Assembly of the United Nations in its resolution adopted in 1957 first recognized "the need of landlocked countries for adequate transit facilities in promoting international trade." At that session, the General Assembly invited the Governments of Member States "to give full recognition to the needs of landlocked Member States in the matter of transit and trade and therefore to accord them adequate facilities…". At that time,
the landlocked developing countries, members of the United Nations, were few in number Bolivia and Paraguay in Latin America, and Afghanistan, Bhutan, Laos and Nepal in Asia. To date, the number of landlocked developing countries that are members of the United Nations has increased steeply to 30 countries, encompassing all major continents of the world.

High transport costs facing landlocked developing countries have become a far more restrictive barrier to trade for these countries than tariffs. As result of the Uruguay Round of trade negotiations, tariffs for major world markets range from 3 to 7 percent on goods originating from most landlocked developing countries. However, landlocked developing countries on average pay almost three times higher for transport services than these tariffs. There is a clear correlation between distance and transport costs. In this respect the World Bank estimated that 1 percent increase of distance from major markets could result in more than 1 percent decrease in the volume of external trade.

High transport costs have enormous impact also on the economic development of the landlocked developing nations. Let me mention some example here.
High transport costs reduce export profits. They also cause inflation of price of imported inputs for manufacturing. Moreover, high transport costs also reduce the level of investment, both directly through increasing the costs of imported capital and indirectly through reducing the level of total savings that is available for investment. Both have a negative impact on growth in the long run. Countries with high trade transaction costs are also less likely to attract export-orientated private capital. Transport costs affect a country's selection of trading partners. If export markets largely consist of poor, slow growing markets and there are significant costs (including transportation) of switching to new, richer, and faster growing markets, those countries maybe constrained in their growth potential.

Because of these important factors, landlocked developing countries find themselves among the poorest of the developing countries, with the weakest growth rates. In particular, landlocked developing countries had the weakest GDP per capita growth rate in the 1990s compared to other developing countries. Even, their growth rate is much slower than that of the least developed countries as a group. There is a real risk for landlocked developing countries of being further marginalized in the world economy and the gap between landlocked developing countries and other developing countries will further widen, unless this negative trend is arrested.

The international community has been increasingly realizing this reality.
The most remarkable demonstration of this was the 2000 UN Millennium Declaration in which the world leaders called for a global partnership to address the special needs of landlocked developing countries. Also, in December 2001, the General Assembly established the Office of the High Representative to give a higher profile and to bring a coordinated effectiveness in addressing the issues related to these countries along with those of the LDCs and SIDS.

Against this background, the General Assembly has adopted a landmark resolution on convening the International Ministerial Conference of Landlocked and Transit Developing Countries in Kazakhstan. The Ministerial Conference is expected to adopt a global programme of action for the LLDCs, which would address all fundamental transit issues and will formulate appropriate policy measures and action-oriented programmes aimed at developing efficient transit transport systems.

Mr. Chairman,

The expectations of the landlocked developing countries from the Conference is high as it would be the first ever high level UN global event to address their special needs in the efforts to effectively integrate into the world economy. The positive outcome of the Conference will definitely galvanize international recognition and support in favour of landlocked developing countries. Therefore, the landlocked developing countries need to make concerted efforts to adopt an implementable programme of action that takes into account their needs. They should make efforts to agree on measures aimed at further improving conditions to enjoy fully their legitimate right to have unfettered access to the sea by all means of transport;
to reduce costs and improve services so as to increase the competitiveness of their exports; to reduce delivered costs of their imports; to have routes free from delays and uncertainties; to reduce enroute loss, damage and deterioration; and to open the way for export expansion.

The Secretary-General of the United Nations is fully aware of the high expectation of these countries and entrusted me to mobilize all parts of the United Nations to assist landlocked and transit developing countries to arrive at focused, measurable and action-oriented outcome at the Conference.

Please rest assured, distinguished Ministers, I will undertake every efforts to make that happen.

I thank you very much.