Rutgers Model ong>Unitedong> ong>Nationsong> 2006 3 world economy on an equitable basis.” 1 It does so by promoting the development of relationships among states and through the simplification of trade policies among those states. As the world has grown smaller over time, trade has grown from a relationship among partners in close proximity to each other to a relationship in which the ends of transactions happen on different continents. While much of the world borders oceans and other waterways, many states do not have access to these transportation advantages, and are forced to conduct their trade through nearby or bordering states. The ong>Unitedong> ong>Nationsong> defines transit trade as “a country’s foreign trade that passed through a third country’s territory prior to reaching its final destination.” 2 Difficulties arise when cargo passing through a third state and is held up by customs barriers or tariffs. The implications of transit transport are the changing conditions of borders, which results in additional cost and time before transactions can be completed. The nations most affected by transit trade are landlocked developing countries (LLDCs), and are typically states that have difficulty growing their economy due to geography. Throughout history, considerable effort has been made by states to gain access to coastlines. Water affords states the opportunity to reach the global marketplace directly, and without the potential for hold up to occur as goods are held in intermediary states. Should a bordering state seek to harm the economy of a bordering country, all it needs to do is stop trade goods in ports for considerable periods. Especially in the case of perishable goods, this delay can make trade cost-prohibitive. Tariffs: a tariff is a tax imposed on imported goods that increases the cost of the goods to importers, and hence increases the price of these goods on the market. Domestic goods, of course, pay no tariffs, and the price is lower than the imports. In this way many countries have protected their own industries from foreign competition. The spread of free trade has removed most tariffs, and removed the protection countries can give to their own industries. Source: www.naiadonline.ca/book/01Glossary.htm Landlocked nations have the biggest disadvantage since they have no direct access to a port, thus having to go to farther lengths for international trading to occur. 1 “About UNCTAD” UNCTAD. http://www.unctad.org/Templates/Page.asp?intItemID=1530&lang=1 (Accessed 24 March 2006. 2 “TD/B/COM.3/EM.22/2 Design and Implementation of Transit Transport Arrangements.” ong>Unitedong> ong>Nationsong>. 4 October 2004. http://www.unctad.org/en/docs/c3em22d2_en.pdf.
Rutgers Model ong>Unitedong> ong>Nationsong> 2006 4 According to UNCTAD, these countries are distributed as follows: “15 are located in Africa, 12 in Asia, 2 in Latin America and 2 in Central and Eastern Europe.” 3 The UN also states that LLDCs are amongst the most disadvantaged nations in the world, because they face “severe challenges to growth and development due to a wide range of factors.” 4 These countries also depend on the use of transit trade for their integration into the world economic market. Since the inception of the ong>Unitedong> ong>Nationsong> ong>Conferenceong> on Trade and Development, there has been an ongoing focus on the development of landlocked nations. Some LLDCs also fall under the category of Least Developed Countries (LDCs), and the average GDP per capita of these LDCs “is less than a third of that of coastal developing countries.” 5 Landlocked states have the common problem of “geographical remoteness and high transport costs in international trade transactions.” 6 According to the UN, Kazakhstan is the most remote nation, having to transport goods approximately 3,750 kilometers before they reach the sea. According to UNCTAD, “on average [,] landlocked developing countries spent almost two times more of their export earnings for the payment of transport and insurance services than the average for developing countries and three times more than the average of developed economies.” 7 Reducing these costs can greatly increase the productivity of a nation’s economy. In modern times, certain methods of trading of goods are encouraged, including combinations of modes of transport, usually done by carriers operating on land, sea, and air. Land transport is usually done by rail, or on the road, by trucks. Most of the world’s trading, however, travels the seas despite the numerous methods of land transit. Of course, this poses a huge hindrance on nations that do not have direct access to the sea or to ports. 3 “About UNCTAD” 4 Ibid. 5 TD/B/COM.3/EM.22/2 Design and Implementation of Transit Transport Arrangements” 6 “UNCTAD/LDC/2005/3 (Part I) Effective Participation of the Landlocked countries in the Multilateral trading system,” ong>Unitedong> ong>Nationsong>., 7 June 2005. http://www.unctad.org/en/docs/ldc20053p1_en.pdf (Accessed 20 February 2006). 7 “Landlocked Developing Countries,” ong>Unitedong> ong>Nationsong>, http://www.un.org/special-rep/ohrlls/lldc/default.htm (accessed 20 February 2006).