Memorandum submitted by Christian Aid
TRADE POLICY
DECISION-MAKING
Division of responsibility between the Minister
for Trade and the Minister for Trade Promotion and between the
Secretaries of State for Business, Enterprise and Regulatory Reform
and for International Development;
Formal decision-making structures between the
ministers and departments involved in trade policy
1. Christian Aid welcomes the shift in responsibility
for trade policy making to the Secretary of State for International
Development. This clearly signals that external trade policy of
the UK as part of the European Union must be driven primarily
by development concerns. The role of the UK as a key donor and
trading partner of some of the world's poorest countries means
that its decisions affect their opportunities to export, as well
as to develop their own markets and supply-side potential using
trade-policy tools, such as tariff protection.
2. This should mean an international development
lead in all external trade negotiations and trade policies affecting
developing countries. This includes policy reviews—such
as those on market access and trade defence mechanisms—and
trade negotiations conducted under the remit of the EU's external
competitiveness strategy outlined in its "Global Europe"
paper. So far this development priority has been lacking, despite
the fact that regions affected include least developed countries,
are home to large numbers of poor people and suffer structural
economic development problems such as high levels of inequality
and dependence on agriculture.
DIRECTION OF
TRADE POLICY
How trade policy may evolve under the new arrangements
and DFID's role in policy development;
The impact of the new structure on international
development;
Likely effects on negotiations at the WTO and
with the African, Caribbean and Pacific countries in the Economic
Partnership Agreement negotiations which are scheduled to be completed
by the end of 2007
3. A development policy lead is particularly
welcome, as up until now, the relationship between trade and development
policy has been governed by the concept of "coherence"
at the EU and UK levels. This has been largely inadequate to ensure
development outcomes—as demonstrated by the current situations
in negotiations at the World Trade Organisation and EU-ACP Economic
Partnership Agreements. (For recent assessments of the poor development
prospects of these talks see "What could the Doha Round mean
for Africa?" Carnegie Endowment (2007), "For Better
or for Worse: Rethinking EU-ACP Trade relations", Christian
Aid (2005)).
4. Coherence too frequently has meant identification
of mitigation measures to accompany predetermined policies, rather
than properly tailoring policy choices to development needs. This
is exemplified by the Sustainability Impact Assessment (SIA) process
used to ensure "coherence" between EU development policy
and trade negotiation outcomes. Impacts of trade reforms are difficult
to predict and depend on local conditions. Impact assessments
are therefore important to guide developing country policy choices
and EC conduct in trade negotiations. However, SIAs are only carried
out after the finalizing of the EC's negotiating mandate and frequently
finish post-deal. They do not influence the EC's negotiating practice,
as demonstrated by the WTO SIA which concluded that Kenya should
not at this stage liberalise distribution services, because of
impacts on local retailers and suppliers, yet the EC still made
requests in these sectors to African countries, such as Kenya,
during GATS negotiations.
5. A critical role for DFID in taking a
lead in external trade policy, would be to promote more evidence-based
policy making with respect to developing countries. These impact
assessments and research should take account of recent criticisms
of World Bank trade research that criticized the sidelining of
research that did not support preferred policies and over-relied
on conclusions from research that supported preferred policies,
without sufficiently acknowledging its flaws. ("An Evaluation
of World Bank Research 1985-2000", Angus Deaton, World Bank
(2006)). This policy bias has been evident in SIAs, for example,
that fail to question assumptions on the short-term nature of
impacts of trade liberalization, and do not even examine the viability
of alternative policy approaches.
6. The second shift in trade policy making
should be to support options that provide the greatest scope for
developing country ownership of trade and economic policies. This
is in line with good development practice as well as with the
governments own statements on economic conditionality and trade
and development.
7. In concrete terms for EU-ACP EPA negotiations
this would involve first and foremost the removal of the threat
of the end of the WTO waiver for Cotonou preferences by providing
assurances to ACP governments that market access for their exporters
will not be disrupted and/or to provide a viable alternative in
line with Cotonou commitments. Second, it would involve an arrangement
on market access concessions that would allow ACP countries to
decide the scope, pace and sequencing of their trade liberalization,
including by introducing special and differential treatment provisions
to WTO GATT Article XXIV governing regional trade agreements.
Finally, it would involve removing trade-related issues from the
agenda, unless specifically requested by an ACP region. These
areas are not required by WTO rules and encroach on sensitive
areas of domestic regulation. (For more information, see Christian
Aid (2006), EPAs and Investment).
8. In WTO negotiations, above all developing
countries should not be forced to sign up to a deal because of
the latest sense of urgency—a slowing down or hiatus in
the negotiating process would be preferable to this outcome, particularly
if it provided the opportunity of a reform to negotiating processes
to properly involve developing country WTO members and a stock-take
of the development impact of current proposals. A better result
in a WTO deal for developing countries involve a halt to the current
thrust of negotiations, that pushes developing countries to liberalise
for little return, and a refocus on the neglected "development
agenda" of improving market access for developing countries,
including tackling non-tariff barriers, and making special and
differential treatment operational and effective. Aid for trade
can be useful in helping developing countries address supply-side
constraints and adjustment costs of trade reforms, but should
not be linked to or made conditional on signing up to any deal.
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