WORLD TRADE  
ORGANIZATION  WT/TF/COH/S/9 
11 October 2004 
 (04-4235) 
 Original:   English 
   
COHERENCE IN GLOBAL ECONOMIC POLICYMAKING AND COOPERATION 
BETWEEN THE WTO, THE IMF AND THE WORLD BANK 
 
Note by the Secretariat
1 
 
 
I. TRADE LIBERALIZATION AND POVERTY REDUCTION 
"In addition to bolstering investor con fidence in the short term, a Doha Round 
agreement that slashed trade barriers, partic ularly in agriculture, would stimulate 
trade and raise incomes around the world, leading to a substantial reduction in 
global poverty."  (World Bank, Global Economic Prospects 2004 ) 
1. The General Council's decision of 1 August 2004 on the Doha Work Programme places WTO 
Members again in a position to increase the contribut ion that the WTO can make to achieving greater 
coherence in global economic polic ymaking, and to advancing their shared objectives of growth, 
development and poverty reduction.   
2. For the WTO, expanded market access, in de veloped and developing countries, lies at the 
heart of the task.  From the point of view of the core development dime nsion of the Doha Work 
Programme, it is central to raising incomes and re ducing poverty in developing countries.  Removing 
trade restrictions and trade-distorting measures can make a singularly important contribution to 
reducing poverty, as well as to reducing foreign indebtedness, increasing flows of financing for 
development, strengthening economies structurally, a nd boosting long-term growth – in short, to more 
coherent global trade, financia l and development policymaking.  In this respect, the Doha Work 
Programme complements other multilateral initiatives th at have been taken since the mid-1990s to 
provide least-developed and other lo w-income developing countries w ith debt relief, increased foreign 
aid, and support for their domestic economic reforms.2 
3. The leadership of the industrialized countries in reducing trade barriers is a pre-requisite for a 
pro-development outcome from the Doha Work Pr ogramme.  These countries account for two-thirds 
of world trade, so their trade restricting and distorting policies have the greatest effect on global 
markets and trade flows.  This is most evident in agriculture, which is discussed below.  In trade in 
manufactured products, World Bank data show that  exporters in industrialized countries face, on 
average, a tariff of 1 per cent on their trade with  each other, whereas exporters from developing 
countries to industrial-country markets face average ta riffs of anywhere from 2 per cent if they are in 
Latin America (where NAFTA weighs heavily in the calculation) to 8 per cent if they are in South 
Asia.  The explanation lies in the product-mix.  Imports of primary produc ts and labour-intensive 
manufactured products are taxed more heavily by industrialized countries than capital- and 
technology-intensive products that they trade among themselves. 
                                                      
1 Prepared in consultation with staff of the IMF and the World Bank. 
2 These include the IMF/World Bank Initiative for Hi ghly Indebted Poor Countries (HIPC);  the IMF 
and World Bank of Poverty Reduction Strategy that provides for a coordinated response by the international 
community to treating each low income country’s development and poverty reduction needs comprehensively;  the 1996 WTO Plan of Action for the Least-Develope d Countries;  the UN Millennium Development Goals;  
and the Monterrey Consensus on Financing for Development. WT/TF/COH/S/9 
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Box I   
 
Quantifying the promise of the market access negotiations
 
Econometric modelling points to the size of the stakes involved in the Doha market access 
negotiations.  The results should not be judged by ta king the numbers at face value, but rather by 
whether in general terms they seem significant or not  – and there can be little doubt that the potential 
gains from substantial reductions in market acce ss barriers are very significant indeed.   
 The World Bank has estimated that the dynamic ef fects of a "pro-poor" reduction of merchandise 
tariffs by industrialized countries a nd middle-income developing countries
3, along with the 
decoupling of agricultural subsidies and an end to agricultural export subsidies, would produce 
additional income for developing countries of near ly $350 billion and would leave 8 per cent fewer 
people (61 million) living below the extreme povert y line of $1 per day – and 140 million fewer 
people living on under $2 per day – by 2015, th e target date for achieving the UN Millennium 
Development Goal of halving world poverty.  A more ambitious target of full merchandise trade 
liberalization, with a supportive domestic policy en vironment, can result in gains of around 5 per cent 
of income in developing countries and lift 300 milli on people out of poverty by 2015.  If greater 
opening of services trade were to occur also, incl uding under mode 4, th e benefits would be 
substantially greater.  No other area of interna tional economic cooperation – debt relief or official 
development assistance, for example – holds out such a promise. 
 
What must be emphasized, however, again and again is that increased market access on its own is not enough.  It provides a golden opportunity, but bo osting economic growth depends on getting other 
economic policies "right" too, including import polici es, so as to allow domes tic markets to function 
better, resources to be allocated more efficiently, and additional income to be generated from trade as 
the economy moves closer to its core areas of co mparative advantage.  Th e greatest share of the 
welfare gains from multilateral trade liberalization comes generally from increasing domestic market 
access and using the negotiations to help push through domestic economic reforms.  Assisting 
developing countries to realize those gains is the overarching objective of IMF and World Bank 
cooperation with the WTO, and of their support for the Doha Work Programme.  
 
 
4. South-South trade matters as well for achievi ng a pro-development outcome to the Doha 
Work Programme.  Almost 40 per cent of developi ng countries' exports go to other developing 
countries.  Middle-income developing countries have substantially increased their global market share 
in the past two decades, so thei r trade policies no longer have only minor consequences for their trade 
with each other and with low-income developing co untries.  World Bank simulations show that their 
own trade policy reforms would produce a large shar e of the benefit, to themselves and to other 
developing countries, from global liberalization of trade in agricultural and manufactured products.  
Latin American exporters of manufactures, for exam ple, face tariffs in neighbouring Latin American 
markets that are seven times higher than those they face in industrialized country markets.  In South 
Asia, the multiple is two. 
5. This lesson, that a large part of the economic gains from trade liberalization accrue 
domestically, should not be overlooked in the contex t of reciprocal bargaining for market access in 
the WTO.  Low-income countries, while having a special  interest in greater ma rket access from all of 
                                                      
3 A "pro-poor" tariff reduction would involve industri alized countries reducing th eir tariff averages and 
tariff peaks, respectively, to 5 and 10 per cent in agriculture, and 1 and 5 per cent in manufactures, and corresponding tariff reductions by middle income developing countries to 10 and 15 per cent in agriculture, and 
5 and 10 per cent in manufactures.  See World Bank, Global Economic Prospects
, 2004  WT/TF/COH/S/9 
 Page 3 
 
 
their trading partners, stand to benefit substantia lly in economic terms from liberalization and reform 
of their own domestic policies.  They can also he lp each other.  Continuing the example from the 
previous paragraph, exporters of manufactures in Sub-Saharan Africa face tariffs in neighbouring 
countries that are six times higher than the on es they face in industrial country markets. 
A. THE CRUCIAL ROLE OF AGRICULTURE  
6. Agricultural trade liberalization has a crucially  important role to play because poverty is 
concentrated in rural areas and activities in poor count ries.  Over 70 per cent of the poor in developing 
countries live in rural areas.  Agriculture is the la rgest employer in low-income countries, accounting 
for about 60 per cent of the labour force a nd producing about 25 per cent of GDP.   
7. Agriculture is one of the most distorted sectors of international trade.  Trade barriers facing 
developing-country exporters of agricultural products  are four to seven times higher in industrialized 
countries than the barriers facing their exporters of  manufactured products, and two to three times 
higher in developing countries.  Problems of tariff peaks, tariff escalation, specific duties and 
subsidies are all more pronounced for trade in ag ricultural products.  A significant reduction in 
protection of agriculture would produce new income  opportunities for the world's poor that far exceed 
those that can be anticipated from presen t levels of development assistance. 
8. The World Bank has estimated that the benefits of global liberalization in agriculture – the 
elimination of all border restrictions and subsidi es – would top $350 billion for the world as a whole.  
With liberalization, world prices for many commod ities would increase:  by 10-20 per cent for cotton 
and groundnuts, 20-40 per cent for dairy products and s ugar, and 33-90 per cent for rice.  In the World 
Bank's simulation of its "pro-poor" trade reform scenario (see footnote 3), the reduction of trade 
barriers in agriculture and food products yield two- thirds of the total static gains from merchandise 
trade reform.  Over half of those gains accrue to developing countries, and 80 per cent of that is the 
result of their own trade liberalization and reforms in  their agriculture and food sectors.  Under this 
scenario, the volume of trade would increase sharpl y, by nearly 50 per cent in processed foods and 
over 30 per cent in agricultural products by 2015. 
9. Serious agricultural trade policy reform w ill increase world prices for many agricultural 
products, and could lead to balance-of-payments pr oblems for low-income developing countries that 
are net food importers.  The World Bank estimates that  14 low-income countries could be particularly 
vulnerable in this regard.  Their net food import bill in 2000-2001 was $2.8 billion.  In this group, 
three countries account for 80 per cent of that total – Bangladesh, Pakistan, and the Democratic 
Republic of Korea.  The other 11 countries had a de ficit of $565 million, a relatively small percentage 
of their total trade.  Exports of these countries are predominantly agricultural and they would gain 
from increases in world prices for agricultural pr oducts, as well as from other aspects of the Doha 
trade negotiations.  Nevertheless, some of them may require financial suppor t in order to mitigate 
short-term adjustment costs.  Both the IMF and the World Bank have recently given added assurances 
that they stand ready to provide financial support in this area. 
 WT/TF/COH/S/9 
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Box II   
 
Financial support for agricultural trade reform
 
IMF and World Bank staff participated in the in ter-agency panel that wa s set up after the Doha 
Ministerial Conference to explore ways and means of improving the access of LDCs and net food-
importing developing countries (NFIDCs) to multilat eral financing programmes and facilities in this 
area.  They also participated in the follow-up in ter-agency roundtable that was convened by the 
Committee on Agriculture to explore the need for a safety net to be established to assist these 
countries during the reform process leading to greater  liberalization of trade in agriculture.  The 
Committee forwarded its report (G/AG/16) to  the General Council,  which approved the 
recommendations in July 2003 (WT/GC/M/81).  As part of these recommendations, WTO Members, as Member countries of the IMF, are urged to ta ke into account the concerns of the LDCs and 
NFIDCs when reviewing the IMF's Poverty Reduction and Growth Facility (PRGF) and 
Compensatory Financing Facility (CFF). 
The Executive Board of the IMF concluded its revi ew of the CFF in March 2004.  Many Executive 
Directors felt that in the absence of clear demand for IMF resources under the CFF by the time of the 
next review, the facility should be eliminated.  No ting that the CFF had not been drawn on since 1999, 
they acknowledged that official financing is often not  large or flexible enough to deal with temporary 
shocks and that the CFF is not an attractive option for low-income countries given its non-concessional nature.  Directors were in favour of developing a short-term "window" under the IMF's 
PRGF Trust Fund so that it could also serve the pur pose of compensating for unanticipated shortfalls 
in export earnings in low-income countries.  (IM F Review of the Compensatory Financing Facility, 
Press Release, 04/35, 7 April 2004).  Options for a concessional "shocks" fac ility which would allow 
rapid disbursements to meet balance-of-payments shortfalls from a variety of sources have also been under the discussion in the IMF.  
 
B. NON-AGRICULTURAL MARKET ACCESS AND SERVICES  
10. From several points of view, the trade perform ance of developing countries during the 1990s 
was exceptional.  Their merchandise exports increased  at an annual rate of 8.5 per cent, compared 
with growth of less than 2 per cent in the 1980s, and within a decade their export revenues rose from 
below 15 per cent of GDP to almost 25 per cent.  The bulk of the explanation for this lies in the reforms that many developing countries made to  their domestic trade and economic policies.  
11. No less remarkable than the overall growth was the transformation that took place in the 
product mix of their exports.  Twenty years ago, developing countries derived 70 per cent of their 
merchandise export revenue from natural resource-b ased commodities – agriculture, oil and gas, and 
minerals.  Today, that situation is reversed, with 80 per cent of revenue coming from manufactured 
exports.  Almost all of that transformation was reali zed in the last decade.  It has led to stronger 
economic growth in many countries and significant reductions in global poverty, as job opportunities 
are created outside the rural sector.  However, large regional disparities remain.  The share of 
manufactures in merchandise exports is now 80- 90 per cent in Asia, around 60 per cent in Latin 
America, but still only around 30 per cent in  Sub-Saharan Africa and the Middle East. 
12. Expanding the benefits of trade in manufactured goods to a wider range of countries will 
require significant further decline in trade barrier s, particularly for labour and low-skill intensive 
products in which poor countries have a comparativ e advantage – textiles and clothing, leather and 
leather products, wood, paper and pulp, furniture, rubber products, and meta ls.  While expanding 
market access is not a sufficient condition to cat alyze the economies of poor countries, it can be a  WT/TF/COH/S/9 
 Page 5 
 
 
powerful factor driving investments – in public a nd private infrastructure and education – which are 
indispensable to enable these economies to grow fast enough to reduce poverty.  An ambitious and 
successful conclusion to the Doha negotiations on non-agricultural market access will be a key 
complement to other more limited efforts to reduce trade barriers, for example preference schemes and bilateral and regional free tr ade agreements.  Industrial country tariffs on manufactures from 
developing countries are on average five times highe r than they are on manufactured imports from 
other industrialized countries, and the barriers im posed on "South-South" trade in manufactured goods 
are even higher still. 
13. Trade and foreign direct investment in services have grown faster than trade in goods in 
developing countries in the past decade, more so  than in industrialized countries, and developing 
countries' share of world services exports stands now at around 20 per cent.  In virtually every 
country, the performance of the services sectors can make the difference between rapid and sluggish 
growth.  The income gains from a reduction in prot ection of trade in services are estimated by the 
World Bank to be multiples of those from liberaliz ing trade in goods.  The largest gains come from 
eliminating barriers to entry.  Developing countries,  in particular, are likely to benefit significantly 
from further domestic liberalization as well as the elim ination of barriers to their exports.  Effective 
regulation, ranging from prudential regulation of financial services to pro-competitive regulation of 
telecommunications, is also critical.   
C. T
RANSPORT , TRADE FACILITATION AND LOGISTICS  
14. Policies to facilitate the flow of goods a nd services across borders are as important as 
removing tariff and non-tariff trade barriers if trade is  to deliver its full development promise.  Trade-
related transaction costs – freight charges as well as other logistical costs – are a crucial determinant 
of a country's ability to participate in the global ec onomy.  In developing countries, especially small- 
and low-income countries, higher logistics costs transl ate directly into higher import and export prices 
– the more so when exports have a high content of  imported inputs – and from that into lower wages 
and returns on capital.  World Bank studies suggest, for example, that for the majority of countries in 
Sub-Saharan Africa, transport costs accounted for ov er 10 per cent of the value of trade compared 
with an average tariff incidence on their exports of less than 2 per cent.  Transport costs and logistics 
– ocean freight, inland transport, customs inspec tion, cargo handling and tr ansfer, and processing of 
trade documentation – account for one-third of the cost of door-to-door shipment of containerized carpets from Nepal to Germany, and of tea ba gs from India to the United Kingdom.  One study 
suggests that better trade facilitation would increase  trade from 75 countries by 9.7 per cent;  about 
0.8 per cent would come from improved customs regi mes;  2.8 per cent from more efficient ports and 
the largest gain (4 per cent) from enhanc ing infrastructure in the services sector. 
15. The Doha negotiations on trade facilitation c onstitute part of the task of correcting these 
inefficiencies and lowering the costs of trade.  In addition, national policy action to improve domestic 
regulatory procedures is needed, supported by mu ltilateral development agencies to promote and 
finance institutional improvements and raise trad e-related capacity.  Capacity building and 
development assistance are essential if developing countries are to make the most of their domestic trade facilitation reforms.  This will need to c over a wide range of activities, from building basic 
transportation infrastructures to making legislative ch anges and training regulators.  Some developing 
countries may require only limited technical assistan ce, for example to expedite cargo clearance 
through electronic trade documentation.  Others will need much more help.   WT/TF/COH/S/9 
Page 6  
 
II. INSTITUTIONAL COOPERATION IN SUPPORT OF THE DOHA WORK 
PROGRAMME 
16. The responsibility for achieving an ambitious  market-access result from the Doha trade 
negotiations rests with WTO Members.  However, reducing trade barriers will not be enough on its 
own to fulfil the development and poverty-reduc tion objectives of the international community, nor 
for a sound trade strategy to pay its full develo pment and poverty-reduction dividends.  Trade 
liberalization and trade policy reform need to be  part of a larger development strategy for each 
country, one that includes attention to structural  economic reform and strengthening supply-side 
response, to macroeconomic policy an d financial stability, infrastructure, education and health.  That 
challenge lies at the centre of the Coherence ma ndate, and the WTO's cooperation with the IMF and 
the World Bank. 
17. At the last General Council m eeting on Coherence in May 2003
4, Members encouraged the 
WTO Secretariat to continue to expand its coope ration with the IMF and World Bank staff in three 
areas:  policy analysis , to assist developing countries to evaluate the implications of trade 
liberalization and trade reform for their economies and their development objectives;  technical 
assistance and capacity building , to support developing countries' participation in the Doha 
negotiations and help them to take practical advantage of the results, particularly improved 
market-access opportunities for their exports;  and adjustment assistance , to provide reassurance to 
developing countries that financial and technical ass istance will be available to them when tackling 
the economic adjustment process that will result from the conclusion of the trade negotiations. 
18. The General Council's decision of 1 August 20 04 on the Doha Work Programme creates 
additional opportunities to expand WTO coope ration with the IMF and the World Bank.5  Members 
have agreed to work multilaterally with the intern ational financial instituti ons on development aspects 
of the Sectoral Initiative on Cotton .  In this regard, the Director-Gener al is instructed to consult with 
the IMF and World Bank, among others, to direct effectively existing programmes and any additional 
resources towards development of the economies wher e cotton has a vital importance.  Importance is 
also attached in the General Council's decision to providing developing countries and low-income 
countries in transition, in particul ar least-developed countries, with enhanced technical assistance and 
capacity building , to increase their effective participati on in the negotiations, to facilitate their 
implementation of WTO rules, and to enable them to adjust and diversify their economies.  Members 
have further encouraged improved coordination with  other agencies, including under the Integrated 
Framework for LDCs and the Joint Integrated Techni cal Assistance Programme (JITAP).  In addition, 
WTO Members have invited the IMF and World Ba nk to make a collaborative effort with other 
relevant international or ganizations in order to make technical  assistance and capacity building more 
effective and operational to support the negotiations on trade facilitation . 
19. A positive response by the WTO to requests fro m the IMF and the World Bank for observer 
status in the TNC and its subsidiary bodies would give them first-hand information on where their 
contribution to the success of the trade negotiations can  most usefully be made.  They each contribute 
actively already to the work of many WTO Councils, Committees and Working Groups.  Extending their observer status to the TNC and its subsidiary  bodies would be no more than is required under the 
terms of their Cooperation Agreements with the WTO,  which give them the right to participate as 
observers in all subsidiary bodies of the Ge neral Council, except the Committee on Budget and 
Administration, the Dispute Settlement Body, and dispute settlement panels.
6 
                                                      
4 WT/GC/M/79, 25 June 2003, and WT/TF/COH/S/7, 29 April 2003. 
5 WT/L/579, 2 August 2004. 
6 WT/L/194 and 195, 7 May 2004.  WT/TF/COH/S/9 
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A. POLICY ADVICE  
20. The main vehicle for IMF policy advice at th e bilateral level is the process of annual 
Article IV consultations with its in dividual Member countries.  Article IV consultations are directed at 
the IMF’s core objectives of promoting macroeconomic  stability and growth.  In this context, trade 
policy has been prominent as an instrument of the gr owth agenda, especially in low-income countries.  
Trade policies in the developed countries have receive d increased attention in recent years due to their 
systemic importance for the world trading system as a whole.  The IMF has encouraged trade and 
development assistance policies in developed countries  that are supportive of development, as well as 
reporting on trade barriers and vulnerabilities facing  low-income countries, including as a result of 
changes in OECD textiles and agricu lture regimes.  It has also b een a strong advocate for duty and 
quota-free market access for LDC exports as well for th e elimination of trade-distorting agricultural 
subsidies.  
21. IMF policy advice can be associated with programme conditionality when it is provided in the 
context of financial assistance to countries that expe rience internal or external financial imbalances.  
This may include cases where the imbalances are related to trade-restricting and distorting policies, or 
indeed derive from a process of trade liberalizati on and reform.  Another vehicle for IMF trade policy 
advice is research.  Since the beginning of last y ear Fund staff have prepared studies of preference 
erosion, balance-of-payments safeguards, export cr edit, the fiscal revenue implications of tariff 
reform, and the link between excha nge rate volatility and trade, specifically in response to concerns 
expressed by delegations at the WTO. 
22. An important area for cooperation between the WT O and the IMF is the consistency of policy 
advice and prescription with the rules and disciplines of the two organizations.  Much of this is 
accomplished through informal staff contacts.  In addition, the WTO Secretariat routinely reviews 
IMF country documents that are made available to the WTO under the Cooperation Agreement.  An 
ex  post  review process of this nature is in keeping with the requirement of the Marrakesh Coherence 
mandate that "cooperation … should avoid the impos ition on governments of cross-conditionality or 
additional conditions".  Given that the WTO Secretariat is not able to provide definitive 
interpretations of WTO rules, the possibility of incons istencies arising exists.  Known instances of this 
occurring have been rare.7  The Director-General of the WTO Secretariat and the Managing Director 
of the IMF will continue to monito r this area of cooperation carefully, particularly in instances where 
a Member introduces measures that it considers ur gent and critical to its balance-of-payments 
adjustment but that might be questioned under WTO rules. 
23. Two broader issues of the relationship betw een IMF policy advice and conditionality on the 
one hand, and WTO rules and negotiations on the other, have been raised at times by WTO Members.   
24. One is that, in the view of some WTO Memb ers, IMF trade policy advice and conditionality 
should take more account of the flexibility ava ilable under WTO rules for developing countries, and 
particularly LDCs;  for example, in maintaini ng applied tariffs up to their bound levels, phasing-in 
trade policy reforms gradually on the basis of tr ansition periods prescribed in WTO Agreements, and 
making use of exceptions for development purposes.  It is important to bear in mind in this context that WTO rules and IMF policy advice and conditiona lity serve very different purposes.  WTO rules 
set international trade policy in a legally-binding framework that is negotiated multilaterally with a 
view to creating stable, predictable and transparent trade policies from a long-term perspective.  IMF 
policy advice and conditionality operates within this framework, but is directed at correcting internal 
                                                     
 
7 Two instances were noted in the background paper for the last General Council meeting on 
Coherence (WT/TF/COH/S/7, para. 50).  No additional specific instances have been brought to the attention of 
the WTO Secretariat or IMF staff since then. WT/TF/COH/S/9 
Page 8  
 
and external financial imbalances, usually from a short-term perspective, and at encouraging an 
appropriate policy framework for gr owth in individual countries.   
25. This issue was raised and discussed at the l ast General Council meeting on Coherence, when 
the Managing Director of the IMF concluded that he  would look into it further with IMF staff and the 
IMF's Executive Board.  A 2002 review of IM F conditionality noted that until the 1980s, IMF 
conditionality focused on macroeconom ic policies.  Subsequently, th e complexity and scope of the 
structural performance criteria attached to IMF credit increased significantly.  This broadening and 
deepening of conditionality reflected both an increased emphasis on the need for supply-side 
measures to strengthen the fundamentals underpi nning economic growth and the IMF's growing 
involvement in low-income and transition count ries where structural problems were severe.  
Eventually, the proliferation of performance crite ria came to overburden the programmes and render 
compliance assessment difficult.  The review rec ognized that successful economic policy programmes 
must be founded on strong country ownership and take into account a country's specific circumstances 
and the preferences among viable policy options of  its political leadership and civil society.  
Accordingly, the number of structural conditions , including in the trade policy area, has fallen 
considerably, and the IMF has been striving to be more flexible and responsive in discussing 
alternative policies with governments requesting financial assistance.   
26. A second issue relates to IMF trade policy advice and conditionality that, once implemented, 
is perceived by a Member to weaken its ability to  engage in a future exchange of reciprocal 
concessions in WTO trade negotiations.  This  issue was discussed during the Uruguay Round 
negotiations, and again in a General Council inform al meeting on Coherence in 1999, in the context 
of formally recognizing "credit" in WTO negotiati ons so as to encourage governments to engage in 
and sustain autonomous trade-liberalization in itiatives that go beyond existing contractual 
commitments under the WTO, and to ensure that urge ntly needed trade policy reforms are not delayed 
unnecessarily in anticipation of obtaining reciprocal trade concessions at some future date.  The 
Council for Trade in Services has adopted modalities fo r the treatment of auto nomous liberalization in 
the area of trade in services.  The General Council's Decision of  1 August 2004 confirms a similar 
approach to resolving problems that arise in this context in the area of trade in goods.   
27. In line with its stepped-up commitment to trad e issues in the context of the Doha Round and 
the UN Millennium Development Goal s, the IMF will undertake a comprehensive review of its work 
on trade in early 2005 with a view to (i) identifyi ng the key challenges facing Member countries in the 
trade policy area and addressing them, (ii) assessing whether the modalities of the IMF's trade advice 
in the context of its surveillance, lending, research , and technical assistance activities are well-adapted 
to addressing the key trade policy challenges fa cing the membership, and (iii) examining the 
collaboration with other institutions in the trade ar ea and the scope for enha ncing this collaboration 
further to achieve common goals.  On this latter point, the focus will be on the most appropriate 
division of labour on trade issues with the WTO and the World Bank, taking into account each 
institution's mandate and relative expertise. 
28. Achieving a pro-development outcome from the D oha trade negotiations is a central objective 
in the World Bank’s overall mission of poverty reduction.  The prospective contribution that a successful Doha Round can make to poverty redu ction and to implementing the UN Millennium 
Development Goals, particularly through increased  market access, gives the World Bank a keen 
incentive to support and cooperate closely with the WTO.  With its country-level involvement and 
expertise, it is well equipped to make a substantia l contribution to developing countries’ participation 
in the trade negotiations and the implementation of the results. 
29. The World Bank’s principal comparative stre ngth is in the integration of trade and 
development at the country level.  Over the past fe w years it has stepped up its efforts in this regard, 
under the direction of its Trade Department that coordinates and leads work on trade throughout the 
organization – trade strategies at the regional and country levels, as well as research and analysis,  WT/TF/COH/S/9 
 Page 9 
 
 
technical assistance and training, and capacity building.  After Cancún, the World Bank issued a series of public statements encouraging the resump tion of the negotiations with special emphasis on 
the importance of addressing distortions in agricultura l trade.  As part of its advocacy efforts, the 
Senior Adviser of the International Trade Departme nt was posted to the World Bank's Geneva office. 
30. In the last two years, the World Bank has unde rtaken at the request of Member governments 
more than 20 diagnostic studies of obstacles to trade integration.  Many of these diagnostics have been 
implemented in the context of the Integrat ed Framework programme (see paragraph 39). 
31. The World Bank has complemented its growing trade-related operations with an outreach 
programme aimed to:   provide developing countries with new opportunities to discuss how the Doha 
Round can support development-oriented trade reforms;  to inform them of the nature and scope of 
World Bank support for technical assistance and investme nt in trade-related projects;  and to sensitize 
countries to the gains from trade facilitation reforms.  
B. T
RADE -RELATED TECHNICAL ASSISTANCE AND CAPACITY BUILDING  
32. The IMF and the World Bank have considerable e xperience and expertise to share in the area 
of technical assistance and capacity building.  They  provide support to the Doha negotiations in this 
context through their own country programmes and through collaborating in WTO technical 
assistance activities.  The IMF provides demand-driv en technical assistance mainly on fiscal and 
customs reform.  The World Bank provides an extens ive programme of technical activities in a range 
of trade-related areas.  
33. The IMF is engaged in capacity building at a num ber of different levels, from financing, to 
policy design, to the dissemination of standards and tr aining.  The IMF Institute trains officials in the 
formulation and implementation of macroeconomic and financial policies, enhancing their economic 
policymaking capacity.  IMF experts provide significant and long-standing assistance for customs reform, tax and tariff reform – including to mitigate the revenue implications of trade liberalization – 
and for data improvement.  An impor tant part of the picture on trade-related technical assistance is the 
provision of advice on customs administration reform through the IMF's recently-established, 
regional, technical assistance centres.  In custom s administration, the focus normally lies on the 
formulation of a strategy and action plan to modernize all aspects of the customs administration, including bringing it into conformity with WTO va luation rules and the customs procedures of the 
World Customs Organization.  The emphasis is on customs reforms that support improved service through simple and transparent operations.  On trade policy, the focus is on liberalizing trade whilst at 
the same time preserving government revenue.  Any adverse revenue impact of lowering nominal 
tariff rates can often be offset by other trade liber alizing measures, and frequently the way to improve 
the overall structure of the tariff system is to re duce the tariff level while maintaining an across-the-
board minimum rate. 
34. In addition to its direct training and technical assistance, either in response to specific needs 
or through its regional centres, the IMF's Article IV consultation process with its Member countries 
provides an important channel for tech nical assistance and capacity building.
  
35. In the World Bank, trade-related technical assist ance has been considerably expanded, with 
the appointment of trade coordinators in each of the six regional departments of the Bank who are 
responsible for ensuring a strategic approach to cap acity building.  The World Bank Institute (WBI) is 
the principal provider of training to clients.  Its ob jectives are to assist clients in:  (i) the development 
of sound national trade policy;  (ii) their capacity to participate effectively in the WTO;  and (iii) their 
understanding of the benefits and costs of incr eased openness.  Trade-related activities of the WBI 
will reach over 1,200 participants spread across the world in 2004, through 49 learning activities or 
events focusing on trade in services, trade facilitatio n and standards.  The number of annual events 
compares to 28 in 2003 and 12 in 2002, mainly due to  strong links with local and regional institutions. WT/TF/COH/S/9 
Page 10  
 
36. The World Bank directs much of its trade -related activities towards trade facilitation, 
including institution building and lo gistics.  Trade facilitation in the WTO has a more specific focus 
than trade facilitation for development, which at its  broadest encompasses the policies, institutions 
and infrastructure which help move goods across borders.  Through its Trade Facilitation Initiative, 
the Bank has developed new tools to help improve  the quality of operations and disseminate best 
practices across the different regions.  It has incr eased staffing in critical ar eas such as customs, port 
management and shipping security.   
37. At Doha, Members were urged to provide the financial and technical assistance necessary for 
least-developed countries to meet SPS requirements in their export markets, and to help these 
countries implement the SPS Agreement.  One outc ome of institutional coherence has been the 
Standards and Trade Development Facility (STDF) managed by the WTO, to enhance the capacity of 
developing countries in the standards area through c ooperation between the rele vant institutions in 
SPS-related activities, including through the developm ent of joint institutional projects and provisions 
of STDF-funding to projects in developing countries.
8  The STDF is both a financing and a 
coordinating mechanism.  Grant financing is ava ilable for private and public organizations in 
developing countries seeking to comply with interna tional SPS standards and hence gain or maintain 
market access.  One key element to expanding th e Facility is the focus on providing technical 
assistance for least-developed countries to meet SPS requi rements, in particular by addressing priority 
issues identified through the IF process. 
38. Given that compliance with product standards can present  a severe constraint to trade, this is 
another priority area for the Bank's work on trade-related technical assistance and capacity building.  
In the Bank's view, many developing-country supplier s will not be able to meet stringent standards 
without technical advice, upgraded production an d processing facilities, better enforcement of 
standards and closer working relationships with importers in high-income countries.  Examples of 
some World Bank projects to improve product and process standards include:  in Senegal, 
Agricultural Export Promotion Project which addresses e xport horticultural standards and, in India, a 
Food and Drug Capacity Building project which aims  to strengthen regulatory systems for domestic 
markets that will also govern imports.   
39. The IMF and the World Bank are two of the six core agencies in the Integrated Framework 
for Trade-Related Technical Assistance to L east-Developed Countries (IF), along with UNCTAD, 
UNDP, ITC, and the WTO.  The latter provides services for the IF Secretariat.  The IF, built on the 
principles of country ownership and partnership, h as two objectives:  (i) to integrate trade into the 
national development plans such as the Povert y Reduction Strategy Pape rs (PRSPs) of least-
developed countries;  and (ii) to assist in the coor dinated delivery of trade-related technical assistance 
in response to needs identi fied by the LDC.  It is a four-part process which includes:  first, building 
awareness of the importance of trade for developm ent;  second, identifying constraints to traders 
through a Diagnostic Trade Integration Study (DTIS) a nd creating a Plan of Action;  third, integrating 
the Plan of Action into the national development pl an such as the PRSP;  and last, implementing the 
Plan of Action in partnership with the developm ent community.  An IF Trust Fund was created in 
2001 with two funding instruments, Window I and II:   Window I finances the preparation of the DTIS 
and Window II provides bridge financing for small- scale activities identified in the Plan of Action.9  
In total 32 LDCs are at various stages of the IF process.  Under Window II, 11 out of the 13 countries 
have submitted projects and almost $4 million in financing has been approved.  The Bank notes that 
its trade activities in IF countries, especially Cambodia and Madagascar, are increasing.  The WTO 
also has significantly increased its TA activities in the LDCs.  
                                                      
8 For more information, see the STDF website at www.standardsfacility.org, and G/SPS/GEN/486. 
9 By the end of 2004, DTIS will have been comp leted for Burundi, Cambodia, Djibouti, Ethiopia, 
Guinea, Lesotho, Madagascar, Malawi, Mali,  Mauritania, Mozambique, Nepal, Senegal, and Yemen.  WT/TF/COH/S/9 
 Page 11 
 
 
40. The Diagnostic Trade Integration Study is the main instrument for identifying and addressing 
impediments, including supply-side constraints, that LDCs face in the process of integration.  The 
preparation of the DTIS and its inclusion in na tional development plans has resulted in increased 
attention and support for the country's trade priorities, reflected in a number of cases of increased resources for trade within government budget allocations and by de velopment partners.
10  As the 
cooperative nature of the IF is fine-tuned and more LDCs complete their diagnoses and plans of 
action, the IF will require continued support from the international community, and a commitment to 
the process by beneficiary countries. 
41. In 1999, the IMF and World Bank introduced th e Poverty Reduction Strategy to strengthen 
their approach to providing assistance to low-income countries including debt relief provided under 
the enhanced HIPC Initiative.  The essence of the new approach was to link concessional assistance 
from the IMF and the World Bank (IDA) directly to  the development and im plementation of national 
development strategies, set out in Poverty Reduction St rategy Papers.  As of March 2004, 37 out of 77 
eligible countries had completed a full PRSP. 
42. IMF and World Bank support for the Doha Wo rk Programme depends on the priorities of 
their Member countries.  It is the government of th e country concerned that de termines what weight it 
wishes to attach to trade in the overall progra mme of support that it seeks from the international 
financial institutions – for example its PRSP.  Trad e officials in developing countries and LDCs have, 
therefore, a key role to play at the domestic le vel to factor trade issues into national economic and 
development programmes – in this sense, cohe rent economic policymaking begins at home. 
C. ADJUSTMENT ASSISTANCE  
43. Since the last General Council meeting on Cohe rence, both the IMF and the World Bank have 
announced new initiatives to increase the technical and financial support they are able to provide to 
developing countries during the trade negotiations a nd in the period of economic adjustment that will 
follow when implementing the results.  
44. The IMF's new policy – the Trade Integration Mechanism (TIM) – was presented and 
discussed at a General Council meeting held on 18 Ma y 2004.  It aims to mitigate concerns among 
some developing countries that their balance-of-p ayments position could suffer, albeit temporarily, as 
multilateral trade liberalization changes their comp etitive position in world markets.  Chief among 
those concerns have been preference erosion, the phasing out of textile quotas,  and adverse changes to 
food terms of trade as a result of the elimination of  agricultural export subsidies.  Under the TIM, 
countries may request assistance, under existi ng Fund-supported programmes or under a new 
arrangement.  Recently, Bangladesh became the first country to au gment its PRGF arrangement in 
accordance with the TIM.   
45. The World Bank announced its new "Doha Develo pment Initiative" at the Cancún Ministerial 
Conference.  It aims to assist poor countries to ta ke advantage of new market opportunities and offset 
any adverse initial impacts of trade reform resulting from the Doha Round.  It envisages new 
resources devoted to trade logistics (e.g., transpor t costs) and trade facilitation, in addition to 
enhanced sectoral lending in support of programm es designed to protect workers and vulnerable 
groups, and programme lending for countries implemen ting development-related Doha trade reforms.  
This reflects a longer-term trend of World Bank instruments for supporting country-level trade activities away from adjustment lending for the pur pose of supporting the liberalization of border 
measures, towards the increased use of a wider array of instruments for addressing trade issues – 
technical assistance and capacity-building support to the public sector, and public/private sector 
institution building and facilitating private sector activ ity in trade given the central role it plays in 
                                                     
 
10 WT/COMTD/LDC/W/33, 26 May 2004. WT/TF/COH/S/9 
Page 12  
 
generating export supply capacity.  In the World Bank ’s view, the core constraints that hamper trade 
in goods most directly are in the areas of trade facilitation and compliance with product standards.  
46. Under this approach, the growth in trade-rela ted operations financed by the World Bank has 
been substantial.  The actual and projected commitm ents for new trade operations for the three-year 
period FY04-06 ($2.9 billion) is larger than the commitments of all ongoing operations approved over 
the preceding eight-year period of FY96-03 ($2.4 billi on).  For trade facilitati on the growth is even 
larger.  It estimates that its lending operations for trade facilitation activities – including institution 
building, physical infrastructure and trade-financ ing – made up over 80 per cent of its total trade 
lending in the last two years.  One third of Bank Members have projects in this field and 25 more countries are expected to be added over the next th ree years.  Projected commitments over FY04-06 at 
more than $1.2 billion triple the commitments fo r trade facilitation of ong oing operations approved 
between FY96-03.  
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