Bridges Weekly Trade News Digest • Volume 7 • Number 17 • 14th May 2003
WTO, IMF, World Bank Heads Meet To Discuss Coherence
The heads of the WTO and the Bretton Woods Institutions — the World Bank and International Monetary Fund (IMF) — addressed WTO Members at a first-of-its-kind meeting on 13 May. At the meeting of the WTO General Council (GC) on Coherence, Supachai Panitchpakdi, Director- General of the WTO, Horst Kohler, Managing Director of the IMF and James Wolfensohn, president of the World Bank Group issues a joint statement on their efforts to support the full engagement of developing countries in global trade negotiations. The discussion at the meeting centred on how to better integrate trade, development and finance, and the policies of the three institutions in this regard.
Speakers stress trade integration and poverty alleviation
The GC meeting on Coherence stressed the need for political commitment, especially from G-8 countries, to enable further trade liberalisation through the Doha round negotiations. In his introductory statement, Supachai stressed trade growth as the key to economic growth and poverty reduction, and recalled the Millennium Development Goals. He also stressed that trade negotiations had the potential to unlock new resources flows to developing countries, "…far exceeding those that can be generated through official aid or debt relief".
Echoing Supachai, Kohler said that trade-integration and the pursuit of sound macro-economic and structural policies were mutually reinforcing. Stressing the need for a coherent approach, he cited efforts to assist heavily indebted poor countries (HIPC) through the joint World Bank-IMF HIPC initiative. While the initiative had resulted in a debt-service reduction by two-thirds on average in the 26 assisted countries, he said these countries’ long term growth and debt-sustainability depended on better integration into the world trade system, and highlighted the negative impacts of agricultural subsidies in developed countries.
On special and differential treatment for developing countries, the heads of the WTO, IMF and World Bank highlighted the importance of most- favoured nation (MFN)-type trade liberalisation. They said it would lead to greater overall benefits as compared to preferential, bilateral or regional trade-liberalisation. The World Bank’s Jim Wolfensohn spoke of the Bank’s interest in the link between how WTO Members crafted S&D provisions in the Doha Round, and the Bank’s poverty reduction mission. According to a Secretariat note on Coherence in Global Economic Policy- Making and Cooperation between the WTO, IMF and World Bank (WT/TF/COH/S/7), such provisions would reflect development priorities and institutional capacities of Members and facilitate greater technical and financial support from the World Bank and other donors for trade-related capacity and supply-side development.
Responses and discussion
Some developing countries stressed the need to ensure coherence between the rights available under WTO rules and the conditionality aspects of the Bretton Woods institutions. The also stressed the need to ensure that policy advice was WTO-consistent. According to a trade source, some Members remarked that the WTO framework appeared more flexible and development-friendly than that of the IMF.
Many countries cautioned that liberalisation impacted specific sectors, and India pointed to the need for ’spaces’ for policies. WTO GC Chair Carlos Perez del Castillo, in his address, called for policy analysis to assist developing countries to better evaluate the implications of trade liberalisation and trade reform for their development policies and objectives. Some speakers noted that while the current coherence mandate was trade-related, there was a need for a wider mandate in the context of the 2002 Financing for Development Conference and the World Summit on Sustainable Development. Perez del Castillo also stressed the need for coherence at the domestic level (between different government agencies) as a pre-requisite for achieving coherence at a multilateral level. On technical assistance, several countries emphasised that technical assistance should be demand-driven.
NGO responses
The Centre of Concern provided a document (shortly available at http:// www.coc.org) in response to the one issued by the WTO Secretariat on coherence (WT/TF/COH/S/7). Criticising some of the basic assumptions in the Secretariat note regarding the benefits of trade liberalisation, the NGO document questioned the objectivity of trade-related technical and financial assistance, including capacity building for negotiations, as developing country priorities might not conform to those of donors. According to Shefali Sharma from the Geneva office of the Institute for Agriculture and Trade Policy (IATP), "technical assistance is being used as a political tool to win support for a ‘development agenda’ that is heavily disputed in the WTO. No amount of technical assistance in implementing policies that, in effect, handicap and shackle developing countries in the WTO can improve gains towards development".
Background
The 1994 WTO Ministerial Declaration invited the WTO Director General and the Heads of the World Bank and IMF "…to review the implications of the WTO’s responsibilities for its cooperation with the Bretton Woods institutions, as well as the forms such cooperation might take, with a view to achieving greater coherence in global economic policymaking". Para 5 of the Doha Ministerial Declaration Ministers stated that Members would "…continue to work with the Bretton Woods institutions for greater coherence in global economic policy-making". Para 36 of the Declaration provided for Ministers to examine the relationship between trade, debt and finance within a Working Group under the auspices of the General Council. The General Council is to report to the Fifth Session of the Ministerial Conference on progress in the examination.
ICTSD reporting; "World Economic Agencies Call on G-8 to Give Push to Doha Talks," WTO PRESS RELEASE, 13 May 2003; "IMF-World Bank-WTO Close Ranks Around Flawed Economic Policies," CENTER OF CONCERN PRESS RELEASE, 12 May 2003.
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