Memorandum submitted by the Department
for International Development, Department of Trade and Industry,
Department of the Environment and Rural Affairs, and the Foreign
and Commonwealth Office
SUMMARY
1. The White Paper on Eliminating World
Poverty: Making Globalisation Work for the Poor commits the UK
government to work towards an open and rules based international
trading system which provides an effective voice for developing
countries, supports continuing reductions in barriers to trade
and helps improve the capacity of developing countries to take
advantage of new trading opportunities.
2. International trade liberalisation will
help to reduce global poverty, but there can be losers from trade
reform, at least in the short-term, and these losers may include
the poor. Governments and international organisations therefore
need to work together to ensure that vulnerable people are helped
to adjust to new circumstances and that a range of complementary
policies and programmes are in place that will enable the potential
benefits of liberalisation to be maximised and the costs minimised,
and that the benefits are widely spread within societies, including
the poor.
3. The Government, along with all the other
World Trade Organisation (WTO) Member governments, committed itself
at Doha to making this WTO Round development focussed. As trade
is a matter of Community competence, this means that the UK works
with other European Union (EU) Member States and the European
Commission to develop EU negotiating lines that could work effectively
to this end. In Geneva, the Commission speak on behalf of all
Member States. Within the UK, the Department of Trade and Industry
is responsible for the co-ordination of HMG's overall positions
to feed into the EU discussions, while responsibility for specific
policies falls to the Department of Trade and Industry, the Department
for Environment and Rural Affairs, the Treasury or the Department
for International Development depending on the area for negotiation.
These departments work together with the Foreign and Commonwealth
Office to ensure that the present WTO Trade Round does genuinely
become a development Round by the scheduled end of negotiations
in January 2005. This also requires the EU to adopt a pro-development
stance towards WTO negotiations. The government's priorities in
the run-up to the next WTO Ministerial in Cancun in September
2003 are to:
— work for agricultural reform within
the EU inter alia to facilitate an EU proposal on agriculture
for the WTO that offers increased and significant developing country
access both to the EU market and to wider world markets;
— work for an EU line on tariffs that
reduces their levels overall and in particular tariff peaks and
escalation (ie higher tariffs on semi-processed and processed
manufactured and agricultural products);
— negotiate for an EU line in WTO discussions
that helps deliver an effective mechanism for special and differential
treatment which allows developing countries and least developed
countries to adapt more flexibly to WTO Agreements in line with
their individual needs;
— progress the General Agreement on
Trade and Services (GATS) negotiations, along with relevant impact
assessments, since they offer a route to more developed and competitive
supplies of services to individual countries and their citizens;
— fulfil the Doha Development Agenda
commitments on intellectual property rights, particularly on public
health and access to medicines; and
— ensure that the "new issues"
of competition, investment, trade facilitation and government
procurement are put firmly on the negotiation agenda of the Round
since they too offer benefits for countries at all stages of development;
The government's closely related priorities
are to:
— increase support to trade related
technical assistance and capacity building to ensure that trade
policy is mainstreamed into development and poverty reduction
strategies and that developing countries are better able to participate
in international trade negotiations;
— support developing countries to carry
out impact assessments on requests they receive for increased
market access in services; and
— assist via international bodies research
to be undertaken on various aspects of the round's potential impacts
on developing countries.
UK GOVERNMENT POLICY
ON TRADE
AND DEVELOPMENT
4. The December 2000 White Paper on Eliminating
World Poverty: Making Globalisation Work for the Poor sets out
the government's overall policy on trade and development. This
is to support an open and rules based international trading system
which provides an effective voice for developing countries, and
to support continuing reductions in barriers to trade and to help
improve the capacity of developing countries to take advantage
of new trade opportunities.
5. The White Paper commitments coincide
closely with United Nations Millennium Development Goal targets,
which also place additional emphasis on improving market access
for the least developed countries. In terms of immediate operational
objectives, the Public Service Agreement for 2003-06 includes
a target for DFID, DTI, DEFRA and FCO to secure agreement by 2005
to a significant reduction in trade barriers leading to improved
trading opportunities for developing countries. This will be assessed
in relation both to progress made in the Doha Trade Round (also
known as the "Doha Development Agenda") and in DFID's
case also on the implementation of DFID programmes to support
developing countries' capacity to participate effectively in trade
negotiations.
THE RELATIONSHIP
BETWEEN TRADE
AND POVERTY
REDUCTION
6. The government's support for the implementation
of the Doha Development Agenda (DDA) and complementary trade capacity
building programmes reflects the important role that trade plays
in poverty reduction. Most development specialists and practitioners
would agree that trade openness is a necessary condition for national
economic prosperity, and that increases in openness can contribute
to economic growth, partly through the efficiency gains that can
be made through specialisation and partly through faster technology
transfer[1]Growth
benefits the poor, but it should be recognised that trade reforms
can hurt some groups, perhaps pushing them into or deeper into
poverty, and that some reforms may increase the number of the
poor even though they raise incomes in general. There is thus
a general presumption in favour of trade liberalisation as one
mechanism to reduce poverty. The important policy questions are
how to implement it in a way that maximises its benefits for poverty
reduction and what to do about any poverty that it does create.
7. Assessing the poverty impact of trade
policy reforms can be done at different levels, ranging from the
overall benefits and costs to developing countries resulting from
multilateral trade agreements to the impact of specific reforms
on particular groups of poor people. The benefits of trade reform,
especially import liberalisation to poverty reduction, are largely
through the positive effects that openness has on stimulating
economic growth and generally improving living standards. Open
and competitive markets reduce domestic prices and create a better
climate for investment and the adoption of new technology and
working practices. All this raises productivity in the economy.
The evidence suggests that, at least in the longer run, the poor
gain a share in this increased prosperity.
8. The immediate effects on specific poor
groups will depend on how trade reforms affect the prices of liberalised
goods, their impact on profits, employment and wages and their
impact on government revenues[2]For
example, a reduction in import tariffs should lead to lower prices
and will benefit consumers in general, but it could lead to a
significant loss of income for some people if it means that they
lose their jobs in an industry which cannot compete without tariff
protection. The specific impact on the poor will thus depend on
whether they are net consumers or producers of liberalised goods,
what types of labour they supply and where their wages lie relative
to the poverty line. Many developing countries rely heavily on
import taxes to finance expenditure and so it is sometimes argued
that tariff reductions could also reduce government revenues if
import volumes do not increase sufficiently, thereby limiting
the government's ability to provide public services for the poor.
However, the reduced tax burden on consumers may increase the
demand for goods produced by other poor households, increased
growth would itself expand revenues and governments can change
tax structures (eg by replacing import tariffs with a value added
tax) in order to maintain public services. Tariff reductions may
therefore lead to higher revenues.
9. One recent attempt to quantify the impact
of trade liberalisation on poverty is that undertaken by the World
Bank[3]Including
productivity gains, they estimate that an additional 300 million
people could be lifted out of poverty[4]by
2015 through the combined effect of reduced global trade barriers
under a comprehensive WTO Development Round; increased aid to
support trade infrastructure (eg customs procedures, trade standards,
reducing transport bottlenecks) in developing countries; unilateral
high income country measures to promote developing country access
to their markets (eg duty and quota free access for all low income
countries); and further trade policy reform in developing countries.
In other words, the faster growth associated with trade integration
results in global poverty declining by an additional 14% in comparison
with the World Bank's base case long-term projections for the
global economy.
10. The World Bank analysis is based on
merchandise trade liberalisation only, with agricultural reforms
alone accounting for 70% of the total gains. The benefits would
be considerably larger if service sector liberalisation was also
included in the analysis. It is also notable that two-thirds of
the gains for developing countries come from their own trade reforms,
rather than international trade agreements, increased aid or unilateral
developed country trade reforms. Concerning the distribution of
the gains, the World Bank estimate that (for merchandise trade
only) unskilled workers will benefit proportionately more than
skilled workers or owners of capital in most regions of the world.
This reflects the fact that existing trade distortions tend to
be most severe in labour-intensive sectors such as agriculture
and textiles.
11. The relationship between trade reform
and poverty is complex and very country-specific. Impact analyses
can be used to identify the potential winners and losers in a
particular country and the integration of trade policy into national
development or poverty reduction strategies can help governments
ensure that the potential benefits are maximised and the costs
minimised. Moreover, governments can provide safety nets to help
redundant workers cope with the loss of income and to acquire
the skills needed to find new sources of income and employment.
12. Successful trade reform requires the
implementation of appropriate complementary policies. Although
these will vary from country to country, sound macroeconomic,
financial, regulatory, institutional and governance policies are
all important. Assessments also need to be made of the impact
of trade reform on fiscal revenues and the agricultural sector—for
the poor are found predominantly in rural areas—and whether
existing safety nets are adequate. By identifying and prioritising
complementary policies, significant gains from liberalisation
can be realised.
BUILDING A
WTO DEVELOPMENT ROUND
13. In order for poor countries to realise
the full benefits of trade liberalisation, the government is working
with other EU Member states and the European Commission to develop
EU negotiating positions that reflect the commitments made in
launching the DDA in November 2001. So it becomes a genuine development
round. This requires all WTO members to adhere to the commitments
outlined in the DDA and work consistently to conclude negotiations
by the target date of 1 January 2005. A year on there has been
much serious work in groups in Geneva, but deadlines have been
missed. It is important to keep up momentum to ensure that this
important multilateral process continues since developing countries
stand to gain more from multilateral rather than bilateral processes
since their negotiating power is thereby enhanced. Developed countries
in particular need to table proposals on market access—for
both manufactures and agricultural products—and make progress
on the issues of concern to developing countries by the time of
the 5th WTO Ministerial in Cancun in September 2003—an important
assessment point in the progress of the round.
14. The government's work in developing
policies at national and EU level for negotiations in Geneva is
complemented by supporting trade capacity building programmes
through international organisations such as the WTO, UNCTAD and
the World Bank and through direct support to developing country
governments or regional organisations. Further details on DFID's
trade policy and capacity building priorities are provided below
in relation to key DDA commitments for developing countries and
the specific issues identified by the International Development
Committee.
MARKET ACCESS—AGRICULTURE
15. The results of the World Bank analysis
referred to above highlight the importance of improved agricultural
market access for poverty reduction. Agricultural trade distortions
are significant—it is estimated that OECD countries provide
around $350 billion per year of support to their agricultural
producers[5]This
is greater than the gross national income of Sub-Saharan Africa.
The combination of these subsidies and various trade barriers
(high and escalating tariffs and tariff rate quotas) represents
a considerable loss of potential income for agricultural producers
in developing countries. Progress in agricultural trade reform
is therefore likely to be a key determinant of whether the DDA
becomes a Development Round or not.
16. The Agreement on Agriculture in 1994
under the Uruguay Round brought WTO members' agricultural policies
under international trade rules for the first time, specifically
on market access, domestic support and export subsidies. The Agreement
has had some impact through (for example) the replacement of quantitative
restrictions by tariffs and limiting the use of subsidies that
are directly linked to production, but has not resulted in any
significant reduction in overall OECD agricultural subsidies.
The DDA commits members to comprehensive negotiations aimed at
substantial improvement in market access, reductions of (with
a view to phasing out) all forms of export subsidies and substantial
reductions in trade-distorting domestic support. The first step
in implementing this agenda will be to agree a set of rules (modalities)
for further agricultural trade liberalisation by 31 March 2003.
Based on these rules, WTO members will submit their proposed new
schedules in time for the Cancun Ministerial in September 2003.
17. The USA and the Cairns Group of agricultural
exporting countries have already submitted modality proposals
to the WTO. These both set forth ambitious reform programmes,
although the US proposal is weak on food aid, export credits and
exemptions for "de minimis" expenditure. A draft EU
modalities paper has also been prepared, but is comparatively
modest, since significant EU agricultural liberalisation will
require progress on the reform agenda included in the mid-term
review of the Common Agricultural Policy (CAP). The review focuses
on price cuts in certain EU market regimes, decoupling direct
payments from production and transferring funds from direct payments
to rural development. Progress with the review has been delayed
by disagreements between EU member states on the degree of reform
required. The European Commission has put forward draft legislative
proposals which will be discussed on 22 January 2003 and it is
hoped that EU agreement on the mid-term review will be reached
in May. If EU members fail to reach agreement by this date, there
is a danger that the EU will not be in a position to offer a meaningful
proposal on agriculture by September.
18. The EU sugar regime for Africa, Caribbean
and Pacific (ACP) countries is governed by the Sugar Protocol,
which the Cotonou Agreement requires the EU and ACP to a review
in the medium term. Sugar is not included in the current CAP mid-term
review. However, a mid-term review of the regime is due in mid-2003
and significant reform of the guaranteed high prices and quota
restrictions of the regime is likely in the near future due to
EU enlargement and increased least developed country (LDC) sugar
imports as a result of the Everything But Arms initiative in 2000.
A formal WTO challenge to the sugar regime has also been made
by Brazil and Australia focusing on export subsidies. It is expected
that the mid-term review of the sugar regime will result in cuts
in EU sugar prices, which are currently between two and three
times the world market price.
19. EU agricultural reforms will have differing
impacts on developing countries, depending on whether they compete
with the EU in world markets, benefit from preferential access
to the EU or are net food importers. Whilst lower EU agricultural
protection will benefit all other agricultural producers through
better access to EU markets and less (subsidised) EU competition
in their own and third country markets, some developing countries,
such as the non-LDC members of the ACP Group, will find the value
of their preferential access to the EU market reduced as a result
of CAP and sugar regime reforms, and may therefore lose EU market
share in the short-term depending on how internationally competitive
their export industries are. Net food importing countries will
face higher import costs since reduced EU production and lower
EU export subsidies may well increase world food prices, depending
on a range of other factors at the time (see next paragraph).
20. It is important not to exaggerate the
negative aspects of EU agricultural reform. For net food importing
countries, higher food import costs should only occur in the short
term since an increase in world food prices will encourage efficient
agricultural producers to increase production, which should cause
world food prices to decline in the medium to long term. The replacement
of subsidised EU production by developing country production will
also reduce rural poverty in developing countries, particularly
as poverty tends to be severest in countries which are not net
food importers. Furthermore, existing EU preferential trade regimes
have not been successful at increasing exports and growth in developing
countries. The ACP share of total EU imports actually declined
from 7% in 1976 to 2.8% in 2000[6]This
reflects the fact that past and present EU/ACP Agreements only
provide limited access to the EU for ACP exports such as sugar,
rice and bananas, whilst temperate agricultural products face
other barriers. Strict rules of origin and sanitary and phytosanitary
rules also limit the ACP's ability to use EU preferences and tariff
escalation discourages them from shifting into higher value-added
export products and restricts diversification possibilities.
21. To help countries cope with the negative
effects of agricultural trade liberalisation, there are provisions
within the Agreement on Agriculture to grant developing countries
longer time periods for implementing reforms. Under the "Marrakech
Decision" within the Uruguay Round, WTO members agreed to
pay specific attention (including the possible provision of technical
and financial assistance) to ensuring that agricultural trade
reforms do not have negative effects on the supply of basic foodstuffs
for LDCs and net food importing developing countries.
22. There have been a number of proposals
for the creation of a "Development Box" in a revised
Agreement on Agriculture. The main objectives of a Development
Box are to minimise the negative impacts of agricultural trade
liberalisation on rural poverty and to promote food security.
There are four main areas covered by the proposal: (i) to protect
developing countries' domestic food production, particularly of
key staple foods; (ii) to sustain the employment, food security
and livelihoods of the rural poor; (iii) to allow flexibility
to provide support to small farmers; and (iv) to protect low income,
resource poor farmers against the dumping of subsidised imports
and from damaging fluctuations in import prices and quantities.
The government is sympathetic to the need for a Development Box
to be built into the Agreement on Agriculture. But the measures
will need to be designed carefully to be specific and targeted
to provide developing countries with the policy flexibility to
address food security issues, and they must have minimal trade
distorting consequences. The government is working with others
to find an effective mechanism for such measures.
OTHER MARKET
ACCESS ISSUES
23. Aside from agriculture, substantial
gains can also be realised from improved market access for industrial
goods and services. It has been estimated that a 40% cut in industrial
good tariffs worldwide would generate an increase in global trade
volume of $380 billion, with three-quarters of the welfare gains
associated with this increase accruing to developing countries[7]WTO
members have agreed that the modalities for negotiations on industrial
goods should be decided by 31 May 2003 and endorsed at the Cancun
Ministerial. To date 14 countries, including the USA and EU, have
put forward proposals to the WTO. These contain a variety of ideas
with tariff reductions by means of a formula emerging as a common
thread. Developing countries will benefit from reductions in developed
country tariffs and tariff escalation in sectors such as textiles
and clothing, footwear and leather goods, in which they have a
comparative advantage. They are also seeking special and differential
treatment clauses to allow some continued protection of their
industries, which the EU proposal addresses to some extent. Concerning
non-tariff barriers, the Uruguay Round agreed that country-specific
textile and clothing quotas under the Multi-fibre Agreement should
be phased out by 2005. The process is now nearly complete.
24. A framework of legally binding rules
governing the conduct of world trade in services is provided by
the General Agreement on Trade in Services (GATS) which was agreed
under the Uruguay Round and came into force in 1995. GATS is a
"bottom-up" agreement whereby members are free to choose
which sectors they wish to guarantee access to foreign competition
and to what extent. The negotiations are carried out via a "request-offer"
process in which member states bilaterally exchange requests for
access to each other's markets. Recipient countries then choose
which requests they wish to accede to and to what level. There
is nothing in the GATS, which obliges or forces a member to agree
to any request. The GATS agreement also acknowledges the right
of governments to regulate their economies to meet domestic policy
objectives.
25. A timetable for the current round of
services negotiations was agreed at Doha and is generally viewed
by WTO Members as a system of benchmarks rather than rigorously
enforced deadlines. To date, most requests for services liberalisation
have been made by developed countries but a number of developing
countries are formulating their own requests. We welcome this
and hope to see more tabled throughout the year. If developing
countries are to make informed decisions regarding the market
access they grant under GATS then they need to be able to assess
the potential impact of such decisions on their economies. The
government therefore supports the need for a GATS impact assessment
to understand more about the effects of service liberalisation.
We are working with other key donors to help support developing
countries in this regard. Rather than attempt to cover all service
sectors, it is generally agreed that individual market access
requests should provide the basis upon which countries can perform
impact assessments.
26. The EU's Everything But Arms (EBA) decision
provided immediate duty and quota free access for all LDC products,
though it is to be phased in till 2006 for bananas and 2009 for
sugar and rice exports. EBA came into effect in March 2001. It
is too early to assess whether it will lead to a significant increase
in LDC exports or whether these exports will solely displace exports
from other developing countries. Much will depend on the speed
at which LDCs have or can obtain the capacity to take advantage
of new opportunities in the EU market and whether EU non-tariff
barriers such as product standards will continue to be a constraint.
SPECIAL AND
DIFFERENTIAL TREATMENT
27. Acknowledging that developing countries
are at different stages of economic, financial and technological
development, WTO agreements include a large number of provisions
regarding differential and more favourable treatment of developing
and least developed countries—usually referred to as Special
and Differential Treatment (SDT). In all the Uruguay Round agreements
contain 155 different provisions of SDT for developing country
members with additional references for the LDCs. These provisions
can be broadly divided into four categories: flexibility under
the rules to introduce and maintain trade restrictions and subsidies;
non-reciprocity (ie liberalisation between developed and developing
countries can be asymmetric); recognised trade preferences for
certain country groupings; and longer transition periods in which
to implement GATT or WTO obligations.
28. While the concept of more favourable
treatment for developing countries has a long history in the GATT/WTO
system, there is considerable dissatisfaction by both developed
and developing countries alike, with the existing system of provisions
regarding differential treatment. In just about all cases provisions
were in large part an "add-on" to agreements already
fully negotiated during the Uruguay Round and as currently crafted
have generated an "opt-in/opt-out" debate on meeting
WTO obligations rather than on how to provide an enabling process
to facilitate developing countries full participation in the multilateral
trading system.
29. SDT is a key issue in the development
of a fair and rules based global trading system, and an appropriate
framework for SDT needs to be resolved in order to allow developing
countries to integrate and benefit from international trade. Over
eighty proposals have been submitted by developing countries to
amend and modify the 155 existing SDT provisions, and also to
provide for new concessions. These proposals represent developing
countries' response to the decision made at the Doha Ministerial,
where ministers agreed that all SDT provisions shall be reviewed
with a view to strengthening them and making them more precise,
effective and operational. The proposals fall into four categories:
(i) calls for improved preferential access to markets; (ii) greater
freedom to use restrictive trade policies that are otherwise subject
to WTO disciplines; (iii) exemptions from WTO rules requiring
the adoption of harmonised regulatory or administrative disciplines;
and (iv) the provision of technical and financial assistance to
help developing countries to implement multilateral rules.
30. The DDA required WTO members to agree
a package of SDT concessions and to plan future work by 31 December
2002, but only four out of the eighty proposals were agreed by
this deadline and there is as yet no clarity as to the future
work programme for SDT. The government is currently assessing
the proposals as to their likelihood of aiding economic development
and supporting developing country integration into the global
trading system. While some of the proposals and concerns of countries
can be effectively negotiated within the terms of existing agreements,
others will require careful consideration. Many may not be readily
nor appropriately accommodated within the existing agreement-specific
approach. This suggests that a more effective framework to facilitate
developing countries' participation in the multilateral trading
system is required. Consequently the government is therefore working
with others (notably the World Bank) on researching a more effective
mechanism for SDT—including the merits of a country based
approach—to feed into the EU and wider negotiating process.
INTELLECTUAL PROPERTY
RIGHTS
31. The Trade Related Aspects of Intellectual
Property Rights (TRIPS) Agreement was established in 1995 as part
of the Uruguay Round. It sets minimum levels of protection for
the main categories of intellectual property that all WTO members
must provide. There has been some concern that patent protection
will limit poor people's and developing countries' access to important
technology, such as medicines and seeds. There are also concerns
that TRIPS does not protect traditional knowledge or the genetic
resources of developing countries. There are numerous alleged
claims of "bio-piracy", where potentially valuable genetic
resources (eg plants with medicinal qualities) are patented and
commercially exploited by foreign companies without local communities
receiving any of the benefits.
32. To take account of these concerns, following
on from the Globalisation White Paper, the Secretary of State
for International Development established an independent and internationally
staffed Commission on Intellectual Property Rights to look at
how intellectual property rules need to develop in the future
in order to take greater account of the interests of developing
countries and poor people. The Commission completed their report
in September 2002. The government is considering the report's
recommendations and will give a formal response to them in early
2003.
33. The government has also been participating
actively in the negotiations in the WTO TRIPS Council, many of
which are of great relevance to developing countries. In 2002
the Council focussed heavily on access to medicines, traditional
knowledge, access to genetic resources and technology transfer.
The Doha Declaration on TRIPS and Public Health confirmed and
clarified the existing flexibilities in the TRIPS Agreement, and
agreed to address the problems countries with little or no manufacturing
capacity face in making effective use of compulsory licensing
provisions (where governments authorise the use of a patented
technology without the consent of the patent holder) by the end
of 2002. However, despite EU efforts to be flexible the original
DDA deadline of 31 December 2002 for agreement was missed, due
to continuing disagreement on what diseases (ie epidemics and
infectious diseases or a wider definition of public health) and
countries (ie LDCs and low-income countries or all developing
countries) should be covered by the solution. Discussions will
continue in early 2003 and it is hoped that agreement can be reached
by the next General Council meeting on 10 February. The UK is
committed to continuing to work with EU and WTO partners to find
a workable and effective solution to this issue.
NEW ISSUES:
INVESTMENT AND
COMPETITION
34. The present investment climate is dominated
by a multitude of bilateral investment treaties that are by definition
discriminatory. The UK's overall objective is to agree a multilateral
WTO investment agreement that promotes open, fair and transparent
investment regimes in WTO members. This would benefit home and
host countries (helping developing countries, in particular, to
participate effectively in the global economy) and investors.
It will increase the credibility of investment rules and lock-in
the benefits of liberalisation.
35. The UK wants the inclusion of provisions
that would allow developing WTO members to pursue development
policies. All of the commitments made could include development
provisions ranging from most favoured nation (MFN)[8]
exemptions in market access, to extended transitional periods
and less onerous notification requirements. The UK is interested
in hearing developing countries' proposals relating to the flexibilities
they would wish to have.
36. The UK government strongly supports
the proposal to negotiate a WTO Agreement on Trade and Competition
based on a set of common core principles. A consistent global
framework to tackle anticompetitive practices, enhance international
cooperation, and ensure the full benefits of trade liberalisation
would help all countries. The government believes that competition
policy should be desirable and beneficial. However some developing
countries consider that they should not be constrained by a multilateral
binding set of rules on competition, which could conflict with
their domestic industrial and social policies. They also have
institutional capacity concerns.policies. They also have institutional
capacity concerns.
37. Through the EU, the UK has sought to
allay these fears stressing that the development dimension would
be central to any agreement on trade and competition, given that
many WTO members are at different stages of development, and indeed
over half do not have a competition law at all. In practice this
could mean that an agreement would have adequate transitional
periods, that any framework of rules would be defined in a flexible
manner taking account of developmental considerations, and that
proper consideration is given to better co-ordinated technical
assistance to help developing countries.
TRADE RELATED
TECHNICAL ASSISTANCE
AND CAPACITY
BUILDING
38. The DDA recognises that technical assistance
and capacity building programmes are required if all countries
are to participate fully in the multilateral trading system. Negotiating
and implementing trade reforms involves significant administrative
cost and human resources, particularly given the increasing number
and complexity of international trade agreements. Tension also
exists between the need for short-term action on trade negotiation
and long-term development needs where trade is reflected in national
development or poverty reduction strategies. It is therefore important
for developing countries to prioritise trade issues within their
national strategies to ensure that the cost of trade administration
and related donor support is proportionate to the expected benefits
and is complemented by other policies and programmes.
39. The Integrated Framework (IF) initiative,
recently re-launched, is designed to embed a comprehensive trade
agenda into a country's development and poverty reduction strategies
and to develop a country led prioritised list of trade related
capacity building needs. It is targeted on LDCs and brings together
six multilateral agencies (World Bank, IMF, WTO, UNCTAD, International
Trade Centre and UNDP) and 14 donor countries (including the UK).
The initiative currently provides support to 14 LDCs and over
40 countries (including non-LDCs) have requested assistance through
the IF approach. An important evaluation of the IF will be undertaken
in the first half of this year. Another complementary initiative
that the UK contributes to is the Joint Integrated Technical Assistance
Programme which integrates the technical assistance activities
of the WTO, UNCTAD and the International Trade Centre in African
countries and aims to raise awareness on trade and to involve
different stakeholders in the trade policymaking process. In addition
DFID country programmes have developed a number of trade related
initiatives—which will be included in a review of DFID's
portfolio of trade capacity building projects in the first half
of this year.
40. Developing countries also need to develop
their trade negotiating capacity and a specific issue is the difficulty
experienced by LDCs in acceding to the WTO. The government has
worked to ensure that there was agreement by the end of 2001 to
changes of WTO procedures that will make the accession process
more relevant to individual LDC needs, such as by linking market
access demands to areas where foreign investment technology and
know how is desired for development. The commitment by LDCs to
implement reforms should be matched with specific commitments
to help build the capacity to enable them to do so.
41. The government's aid budget supports
a number of other bilateral and multilateral programmes ranging
from funding capacity building for developing country negotiators
of the TRIPS Agreement through UNCTAD and the International Centre
for Trade and Sustainable Development to a trade dialogue programme
to strengthen DFID staff capacity to adhere to best practice in
trade related capacity building and technical assistance. Most
multilateral support programmes are managed by DFID's International
Trade Department and are complemented by regional and country
programmes managed by geographical departments. The amount of
funding for technical assistance and capacity building has doubled
from £15 million over to 1998-2000 to £30 million over
2001-03 with a strong focus on Africa.
42. To build on the pro-development outcomes
of Doha and to avoid repeating the mistakes of the Seattle Ministerial,
the government will continue to promote constructive public debate
on trade and the DDA. DTI hosts regular meetings with the Trade
Policy Consultative Forum and DFID with the UK Trade Network,
both of which comprise non-governmental and civil society organisations
with an interest in trade and development issues. In the run up
to the Cancun Ministerial, additional public outreach activities
will be arranged.
Department for International Development, Department
for Trade and Industry, Department of the Environment, Food and
Rural Affairs, and the Foreign and Commonwealth Office
January 2003
1 For further analysis of the effect of trade on income,
see Frankel and Romer, Does Trade Cause Growth, American Economic
Review, June 1999. Back
2
For more detail on these linkages, see McCulloch, Winters and
Cirera (2001), Trade Liberalization and Poverty: A Handbook, CEPR/DFID. Back
3
World Bank, Global Economic Prospects, 2002. Back
4
This is based on a global poverty line of $2 per capita per day
using purchasing power parity prices. Back
5
World Bank, Global Economic Prospects, 2002. Back
6
Eurostep, Coherence in EU Policies Towards Developing Countries. Back
7
Hertel and Martin (2000), Developing Country Interests in Liberalizing
Manufacturers Trade. Back
8
The "normal", non-discriminatory tariff charged on imports
of a good. If all exporters have MFN treatment, everyone is treated
equally and there is no discrimination. Back
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