The key element of microtrade is the building of a global online system to collect and provide information on the supply and demand of LPPs and to facilitate the sale of LPPs in the markets of developed countries where prices are substantially higher. The considerable gaps between relatively low labor costs in LDCs and higher prices in developed countries will be exploited to generate maximum levels of income for LDC producers. However, a series of logistical and legal issues must be addressed to implement microtrade and these are set out below.
Supply and Demand Information
The demand information for a particular LPP (who wants to buy the LPP) and its supply data (who can supply it) needs to be provided to potential LPP suppliers and consumers. The proposed global online system, which should be operated as an open database for upload and download by anyone, can provide such information. Anyone in an LDC may upload information about an LPP in a particular locale and anyone in a developed country may also upload information about demand for a particular LPP produced in an LDC. A number of aid workers, missionaries, NGOs, and international organizations working in LDCs can volunteer to upload this information.
Shipping and Distribution
Once an LDC supplier finds a potential consumer and produces the LPP, the product needs to be shipped to the location of the consumer. But poor transportation networks and shipping services in LDCs will be a challenge. Volunteers, such as missionaries and aid workers in LDCs can help. International commercial shippers may also provide assistance either free of charge or at a reduced rate. As to the distribution of LPPs, existing retail shops and chains, particularly those who are interested in promoting products originated from developing countries, such as Oxfam and The Body Shop, can help. The online database system may also develop online sales functions.
Financing LPP Production
Many LDC producers may require financial assistance for tools and materials to produce an LPP, and for training and education. Development banks, as well as commercial ones, can provide financial assistance. Microfinance, which has provided small scale financial assistance for impoverished people around the world, can also assist with microtrade. Financial assistance can be also provided in the form of pre-payment to LDC producers for LPPs already ordered, subject to collection from consumers on behalf of LDC producers.
Legal and Regulatory Issues
For the success of microtrade, LPPs must pass through customs of the exporting LDC and the importing developed countries without any hindrance. On the exporting side, corruption found in many LDC customs and potential regulatory barriers, such as export license requirements, can be an issue. Assistance from local and national governments, as well as from the international community, will be required to facilitate the export of LPPs from LDCs. On the importing side, LPPs must be admitted on preferential terms without tariffs, quotas, stringent product testing, or administrative delays. Legal and regulatory facilitation may be required to address this issue at local, national, and international levels. The World Trade Organization should take up the role of facilitating microtrade under its mandate.
Microtrade Corporations
For the effective facilitation of microtrade and the management of the proposed online database system, consideration should be given to establishing an international body to take charge. The objective of this body would be the maximization of returns for LDC producers out of microtrade, thereby helping those living in LDCs escape from the worst forms of poverty. To this aim, close cooperation with various parties, including national governments, NGOs, and other relevant international organizations such as the WTO and World Bank, will be necessary. Consideration should be given to granting the body the status of an international governmental organization, independent of any sovereign nation or private interest.
Pairing
A partnership can be formed between an individual developed country and an LDC. The purpose of this partnership is to allow a developed country to provide assistance with microtrade of the partner LDC. Every LDC will be “paired” with a developed country partner who will provide focused assistance on its microtrade and poverty reduction efforts.