WORLD TRADE  
ORGANIZATION  RESTRICTED  
 WT/GC/M/79  
25 June 2003  
 (03-3397)  
  General Council  
13 May 2003   
 
 
 
MINUTES OF MEETING  
 
 
Held in the Centre William Rappard  
on 13 May 2003  
 
Chairman:  Mr. Carlos Pérez del Castillo (Uruguay)  
 
 
COHERENCE IN GLOB AL ECONOMIC POLICY -MAKING AND COOPERATION 
BETWEEN THE WTO, IMF AND WORLD BANK  
 
 
1. The Chairman  welcomed delegations and particularly Dr.  Horst  Köhler, Managing Director of 
the International Monetary Fund, and Mr. James Wolfensohn, President of the World Bank .  He 
thanked them for having found time in their busy schedules to participate in an exchange of views 
with WTO Members on the important issue of coherence in global economic policymaking.  Their 
presence alongside the Director -General, Dr. Supachai, was evidence that the relationship between the 
WTO, the IMF and the World Bank was flourishing.  In his view, it also sent an important political 
signal about the collective commitment to foster economic cooperation at the multilateral level in 
support of shar ed objectives of economic growth, financial stability, poverty reduction, and 
sustainable development.  
2. The agenda contained in WT O/AIR/2086 was adopted.  
3. The Chairman drew attention to the background document for the meeting (WT/TF/COH/S/7) 
prepared by the Secretariat in cooperation with staff of the IMF and the World Bank.  
4. He said that he had consulted informally with a number of Members before the present 
meeting in order to have a sense of their priorities and expectations vis-à-vis the question of 
Cohere nce.  What he had learned was that Coherence was seen as much more than better 
organizational cooperation and understanding between the WTO, the IMF and the World Bank, 
although that in itself was very valuable.  It involved also governments establishing l ong-term 
coherence between their trade, finance and development policies and practices;  one example that 
many WTO Members had raised was that coherence should aim to strengthen the relationship 
between donors and beneficiary countries.  
5. Second, he had been  struck by the awareness among WTO Members that policy coherence 
must start at home, at the domestic level between the different government agencies involved in 
economic affairs, including ministers of finance, trade and foreign affairs.  This was a prereq uisite for 
achieving policy coherence at the multilateral level.  At the multilateral level, the main message from 
his discussions was that progress on Coherence in support of the needs and interests of developing 
countries should be sought in two equally important ways:  (i) through high quality policy analysis 
and adjustment assistance;  and (ii) through technical assistance and capacity -building.   WT/GC/M/79  
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 6. With regard to policy analysis , the development dimension of the Doha Round pointed 
clearly to the need to assist developing countries to better evaluate the implications of trade 
liberalization and trade reform for their development policies and objectives.  Many developing 
countries were anxious about the impact that the outcome of the Doha negotiations might  have for 
their economies during the period of adjustment.  Some specific concerns were the impact of the 
erosion of preferences and loss of fiscal revenue from tariff reduction.  Addressing these concerns as 
early as possible could help developing countri es approach the negotiations more confidently.  What 
they needed was not only assistance to analyse the implications of the Doha Work Programme, but 
also reassurance that they would receive the support of the international financial institutions to help 
them tackle the adjustment process that would inevitably be involved.   
7. Technical assistance and capacity -building was of course closely related to this point, 
although it was directed more at the need for assistance in implementing the results of the Doha 
negotiations and benefiting from them in practical economic terms.  Developing countries sought 
substantial improvements in market access in their main trading partners on the one hand, and more 
efficient economies, with more competitive, dynamic and larger  export sectors that would allow them 
to take advantage of increased market access opportunities, on the other.  A successful outcome to the 
Doha Round would create a need for significant new investment resources in developing countries, 
investment that sh ould promise premium returns in an environment of much reduced trade restrictions 
and distortions at home and abroad.  Clearly, one should be looking to the private sector to play a 
predominant role in this process.  Alongside that, however, there would be  a substantially increased 
need for technical and financial assistance to build trade -related human and institutional capacity and 
infrastructure in developing countries.  
8. He had gathered that Members understood that both the IMF and the World Bank attached  
high priority to a successful outcome to the Doha Round, and viewed it as having the potential to 
make a valuable contribution to meeting their own institutional objectives.  He believed that Members 
would want to encourage them to cooperate closely with the WTO, to support the needs of Member 
governments in producing a successful conclusion to the negotiations and to translate that into more 
growth and less poverty throughout the world.  
9. In conclusion, he asked Members to reflect on how the WTO  might best  carry forward its 
work on coherence issues and further cooperation with the IMF and the World Bank.  He planned to 
conduct further consultations on this with Members and the Director -General.  
10. The statement by Dr. Horst Köhler, Managing Director of the International Monetary Fund , is 
attached as Annex 1.  
11. The statement by Mr. James D. Wolfensohn, President of the World Bank , is attached as 
Annex 2.  
12. The statement by Dr. Supachai Panichpakdi, Director -General of the World Trade 
Organization , is attached as An nex 3.  
A. STATEMENTS  
13. The representative of Morocco , speaking on behalf of the African Group , expressed 
appreciation for the initiative taken by the Director -General, and welcomed the presence of the heads 
of the IMF and the World Bank and their commitment an d support for the Doha Round.  He noted the 
increased importance of  policy interaction in the field of trade, finance and development in relation to 
their work on development and poverty alleviation.  The development dimension of the Doha mandate 
called o n the international community to make even greater efforts to ensure that actions taken by the 
UN, the World Bank, the IMF, and other actors were complementary.  Such international coherence  WT/GC/M/79  
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 could not, however, bear fruit unless there was policy coherence at the national level through better 
coordination between decision -makers in the area of trade, finance and development.   
14. The African continent continued to be faced by all types of economic difficulties, including 
slow growth, falling export income, rapi d population growth, and heavy external indebtedness.  Trade 
liberalization, in particular in agriculture, would have a significant impact on Africa’s development 
and was key to solving some of its endemic problems.  Technical assistance and capacity -build ing 
could have a determining impact on the outcome of negotiations.  It would permit developing 
countries to better grasp the difficulties facing them to arrive at solutions best adapted to the 
challenges associated with liberalization.  On behalf of the A frican Group, he thanked the IMF and 
the World Bank for their financial contribution and their involvement in the WTO programmes of 
technical assistance such as the Integrated Framework.  However, this assistance could not meet the 
objectives defined in th e Doha work programme without more effort at coordination and without a 
more substantial contribution from them to the Special Fund created by the WTO.  He was pleased to 
note Dr. Köhler’s and Mr. Wolfensohn’s continued commitment to strengthening their co ntributions;  
he thought that the WTO could benefit from the experience of the two bodies in strengthening 
institutional capacity and building human resources as well as from their extensive knowledge of, and 
experience with, developing countries in genera l. 
15. Trade liberalization would stimulate growth in a global economy currently suffering from 
recession;  but this objective should not be used to justify additional trade conditionality.  The 
inequities of the trading system for developing countries also ne eded to be addressed in order to 
ensure the optimal outcome.  With respect to trade policy analysis by the World Bank and the IMF, he 
supported the appeal made by the Chairman of the General Council that further studies should focus 
on the negative implica tions of liberalization on developing countries and least -developed countries.  
Greater awareness of the challenges to be faced could spur developing countries to become 
beneficiary partners in an equitable and development -oriented process of globalization . 
16. The representative of Bangladesh  thanked the Director -General for organizing this very 
important meeting, and welcomed the opportunity of seeing the heads of the three organizations 
together in a meeting in the WTO with Members.  He hoped that this would  be the first of many such 
meetings, with a view to achieving coherence in the policies of the three institutions that had such a 
profound impact on the development of Members’ economies.  
17. The statements by Dr.  Köhler and Mr.  Wolfensohn demonstrated an awar eness of trade and 
development problems, and the Director -General's statement had highlighted some key areas of 
interest.  He remarked that the transformation of the GATT into the WTO in 1995 marked a paradigm 
shift, resulting in significant differences be tween the two regimes.  The GATT system was primarily 
about negotiating market access for merchandise trade.  But the WTO's extension into new 
substantive areas, its intrusiveness into domestic policy -making, and its strict dispute settlement 
process, with  the possibility of cross -retaliation, had extended its authority into areas of domestic 
regulation, legislation, governance and policy -making that were central to the development process.  
18. Trade had the potential to accelerate economic growth, create jobs and raise incomes.  This 
was recognized by all.  But trade and globalization had also increased vulnerability and insecurity as 
had been emphasized by the heads of the institutions.  Multilateral institutions could play a major role 
in maximising the poten tial benefits of trade and globalization while minimizing their risks.  The 
experience of the last few decades showed that the expansion of trade guaranteed neither immediate 
economic growth nor long -term economic development.  Internal and external instit utional and social 
conditions played a significant role in determining whether, and to what extent, a country or group of 
people would reap the benefits of trade.  The multilateral trade regime should be based on maximizing 
possibilities for development.  The regime should provide developing countries with policy space, 
giving them the flexibility they needed to make institutional and other innovations – simultaneously WT/GC/M/79  
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 recognizing that trade liberalization and market access could make important contribution s to 
development.  But while the debate about the relationship between trade liberalization, economic 
growth and poverty reduction continued, evidence showed that trade liberalization was not a reliable 
mechanism for generating self -sustaining growth and p overty reduction.  A close study of the 
empirical literature found no compelling evidence that trade liberalization was systematically 
associated with higher growth:  the only systematic relationship between trade liberalization and 
growth was that countri es dismantled trade barriers as they grew richer.  The central question was 
whether the current regime allowed developing countries that policy space.  
19. Market access was important, but it was not enough.  Developing countries gained less from 
trade than did  industrial countries, partly because of falling commodity prices and specialization in 
exports with low value -added and supply -side constraints.  Industrial countries, by contrast gained 
much more from trade and had developed mechanisms to help cope with the vulnerability induced by 
liberalization.  Today, global governance of trade was generating inequitable outcomes.  Though not 
surprising in a world of unequal players, this made it difficult for developing countries – especially 
the poorest and weakest – to formulate polices that promoted development.  Thus, policy -makers in 
both developing and industrial countries faced an urgent challenge to ensure that the multilateral trade 
regime allowed countries to fully benefit from the potential contributions th at trade could make to 
development.  
20. It was here that the World Bank and the IMF could play a key role.  In the developing world, 
particularly among the LDCs, these institutions had a central role in the development process.  The 
policy advice given to deve loping countries could make a difference to the lives of millions;  the 
analysis carried out by the World Bank, on the basis of which such advice was given, should rest on 
firm foundations.  When developing countries undertook adjustment, stabilization or other 
programmes with support from the World Bank or the IMF it was vital that the policy advice given 
did not require those countries to adopt measures that were more restrictive than those required under 
the WTO Agreements.  The policy space allowed unde r the WTO for promoting specific industries or 
programmes should be respected.  The experience of those who had travelled the path to development, 
with foreign trade as a prominent pillar, showed clearly the benefits of targeted intervention.  
21. Technical ass istance was vital for developing countries to integrate into the multilateral 
trading system.  Each agency had its own expertise, and it was necessary to coordinate the many 
programmes that were in place.  Technical assistance had a vital role to play and it should be ensured 
that it served development needs.  Here, he wished to refer to the Integrated Framework (IF), which 
had held so much hope for the LDCs.  The IF had been looked upon as a mechanism that would not 
only help the participating countries in  identifying the right trade -related policies to incorporate into 
their development plans, but also generate a supply -side response from entrepreneurs.  Generating this 
supply response with targeted programmes was vital – without it no amount of policy cha nges would 
address developing -country needs.  Without products to trade, there could be no increase in exports 
and no benefits to derive from a trade -oriented growth strategy.  He hoped that the World Bank and 
the IMF, two key participating institutions in  the IF process, would orient their policies in this respect.  
22. In areas of specific interest to LDCs, both the World Bank and the IMF could take the lead in 
advocating developing -country needs and concerns.  There were areas of particular interest to 
develo ping countries that could be highlighted by the two institutions, along with the emphasis on 
meaningful special and differential (S&D) treatment that was so vital to help those countries achieve 
their goals.  Developing countries would like to see the two institutions more visible in the 
international arena upholding development needs.  
23. Many developing -country Members might raise the issue of the crushing debt burden on their 
economies.  There were programmes underway for easing the debt burden, but question s had been 
raised as to their effectiveness and the extent to which they addressed developing -country concerns;   WT/GC/M/79  
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 the international financial architecture should also be responsive to developing -country needs on 
trade.  
24. In conclusion, he noted that Ministers , when concluding the Uruguay Round, had had the 
foresight to suggest greater coherence in economic policy -making.  They had recognized that trade 
was an integral component of the macroeconomic policies that countries chose to pursue.  At the same 
time, th ey also saw the need for more coherent and complementary international economic policies.  
One without the other was unlikely to succeed.  
25. The representative of the United States  welcomed this opportunity to join with other Members 
and the heads of the WTO,  the World Bank and the IMF to build on the shared commitment to 
coherence in global economic policy -making.  The presence of Dr. Köhler, Dr. Supachai and 
Mr. Wolfensohn together sent a strong signal of this commitment.  She thanked the three staffs for th e 
paper that provided useful background information and encouraged dialogue.  It was not her intention 
to comment in detail on the paper but rather to touch on a number of key themes.  
26. To begin with, it was essential to recognize that coherence started at h ome.  It was all well 
and good to call on the leadership of the Bank, the Fund and the WTO to foster coherence, but to 
ensure success each Member government needed to create the right domestic policy environment and 
ensure that their relevant ministries we re working together.  To put it another way, it was difficult for 
these three institutions to pursue coherence if they were receiving incoherence signals from their 
respective memberships.  One area where this need was particularly evident was in the prepa ration of 
Poverty Reduction Strategy Papers (PRSP) and Country Assistance Strategies (CAS).  She shared the 
concern expressed in the Secretariat's background document that attention paid to trade by countries 
in their PRSP and CAS had been disappointingly low.  It was important that trade received 
appropriate attention in each PRSP and CAS to ensure that trade's contribution to development could 
be maximized.  WTO Members should commit themselves to realizing this objective.  
27. Turning to the Doha Development Agenda, she welcomed the commitment of the Bank and 
the Fund to work with the WTO to ensure its success.  An important sign of this commitment, both to 
the negotiations and beyond, was the Bank's creation of a Trade Department.   She appreciated the 
commen ts from both Dr.  Köhler and Mr. Wolfensohn highlighting the key importance that agriculture 
played in the negotiations in working towards open markets, reducing domestic support and 
eliminating export subsidies.  They had highlighted the overall importance  of market access, be it 
agriculture, non -agriculture, or services, with which her Government whole -heartedly agreed.  
28. One area where both the Bank and the Fund could make an important contribution was 
through their considerable analytical capabilities.  On e of the most cogent arguments for maintaining 
high ambitions for the Doha negotiations was the Bank's assessment that “with a supportive domestic 
policy environment, full global trade liberalization in goods alone can result in gains of around 5 % of 
income in developing countries and lift 300 million people out of poverty by 2015”.  Another example 
of important analytical work had been the IMF's recent study of the possible effects of preference 
erosion and actions that the IMF could take to help in addre ssing these effects.  Her delegation had 
also appreciated the IMF's work on the implications of trade liberalization for fiscal revenues, which 
was a matter of concern to many developing countries.  She encouraged both the Bank and the Fund 
to continue in these analytical efforts.  
29. Another important area for cooperation between the Bank, the Fund and the WTO was trade -
related technical assistance.  The United States valued the cooperation that had already taken place 
but believed that more could, and should,  be done, making sure that increased efforts were 
complementary rather than overlapping or duplicative.  It was also important to ensure that adequate 
attention was paid to assessing the effectiveness of these programmes in order to make the best use of 
resources.  She was particularly interested to hear from Dr.  Köhler or Mr.  Wolfensohn what work WT/GC/M/79  
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 their institutions were undertaking – or might undertake in the future – to help developing countries 
take advantage of increased export opportunities.  She also said she would appreciate their thoughts 
on other areas where the three institutions could cooperate on technical assistance in support of trade 
and development.  Looking beyond trade -related technical assistance, she was interested in Dr.  Köhler 
and Mr. W olfensohn's observations on where they saw the greatest potential for synergies between the 
work of their institutions and the WTO's efforts under the Doha Development Agenda.  
30. The representative of India  felt that everyone realised that coherence between t he main global 
institutions would form a very important element of policy aimed at development and growth;  this 
had been the basis for the Declaration on Coherence.  There was no doubt that there were synergies 
between these organizations that could contr ibute to growth all over the world but it was important to 
be clear as to what were the policies to be formulated and what the terms of reference of such 
coherence should be.  Mr. Wolfensohn had spoken extensively about development as the ultimate 
goal.  A pprehension in several developing countries over how the process of liberalization would 
impact on specific sectors in the economy should be borne in mind.  All over the world, whether in 
trade or in finance, liberalization had been accepted as an overarch ing philosophy.  Liberalization was 
taking place autonomously at the pace that economies and their societies could manage and it was 
important that liberalization should occur at a proper pace.  The philosophy of liberalization should 
not be converted into  a religion, cult or dogma, nor fall prey to the historical blunders that economies 
had made in the past.  One should not assume that liberalization was the ultimate solution and that if 
the problem did not fit the solution then the problem was wrong.   Pr oblems should be studied 
objectively, not dogmatically, to ensure that coherence achieved its objective of development and 
poverty reduction.   
31. He agreed with the President of the World Bank on sequencing and careful examination of 
reforming economic, soci al and trade structures.  Developing country economies were fragile and did 
not have the capacity to withstand shocks.  The representative of Bangladesh had referred to supply 
side constraints, lack of technical capacity, differences in levels of technolog y and skills, and lack of 
capital resources.  Both the IMF and the World Bank had referred to distortions in the global market 
which could not easily be solved.  Liberalization needed to be accompanied by objective analysis of 
regional issues, structural a djustment, supply side constraints and capital formation.  He cited a recent 
IMF paper on "Effects of Financial Liberalization on Developing Countries", referring to financial 
crises:  "first, international investors have a tendency to engage in momentum t rading and herding, 
which can be destabilising for developing economies;  second, international investors, together with 
domestic residents engage in speculative attacks on developing countries’ currencies thereby causing 
instability that is not warranted based on the economic and policy fundamentals;  third, the risk of 
contagion presents a major threat to otherwise healthy countries since a government, even if 
democratically elected, may not give sufficient  weight to the interest of future generations."  He 
explained that he was quoting this to show that there were many issues related to trade or financial 
liberalization which needed to be assimilated in order to achieve optimal growth in a carefully 
calibrated manner.  
32. The representative of Argentina  expressed his appreciation for the statements made by the 
heads of the organizations:  these provided a context for actions taken in the area of international 
coherence and the consequences for Members.  He agreed with the Chairman’s identification of the 
central questions and main messages of the present meeting.  For his part, a central question would be 
to elicit a clear diagnosis as to why the global economy was now performing poorly.  He referred in 
particular to his own country where there had been a sign ificant slowdown, with serious social effects.  
In his view, the causes lay in a decline in demand due to income inequalities between and within 
countries and the imbalances created by the previous decade’s excesses.  Added to the imbalances in 
global capi tal were the crisis in the technology industry and recent major bankruptcies presenting a 
clear danger for sustainable development.  He considered that the international financial institutions  WT/GC/M/79  
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 should position themselves to carry out anti - rather than pro -cyclical financing and should avoid 
financing deficits at the risk of assisting capital flight.    
33. Turning to trade, he appreciated the strong statements by the heads of the Bank and the Fund 
with respect to the positive impact of improvements in market acc ess and the elimination of 
agricultural subsidies on global efficiency and  the development process.  He regretted the lack of 
political will which had limited progress in the trade agenda in line with commitments made at Doha  
in areas of special interest  to developing countries, especially in agriculture.  He wished to conclude 
by quoting from the background document (WT/TF/COH/S/7) regarding the fact that the 
liberalization of trade in goods (and agriculture was fundamental) could lift 300 million people  out of 
poverty by 2015.  Another point to which he wished to draw attention was the importance of creating 
a mechanism  to compensate for the erosion of preferences which could help to overcome an 
important obstacle to the process of multilateral liberali zation.  
34. The representative of Canada  thanked the Director -General for his efforts in arranging the 
present meeting.  When he had been Chair of the General Council, the Director -General had talked 
about this and it was gratifying to see the meeting now com e to fruition.  The presence of both 
Mr. Wolfensohn and Dr. Köhler was a first and also an indication of the importance that was attached 
to the issue of coherence, and Canada warmly welcomed both of these special friends of the WTO.  If 
the aim was to str engthen economic prosperity and enhance peace and stability globally, then the 
trilogy of trade, finance and development was very much an indispensable and holy alliance.  
Coherence was not just a fancy buzz word;  it should, instead, be a level of discipl ine which 
multilateral institutions must work towards and ultimately attain.  Canadians, like citizens elsewhere, 
wished to see more cooperation between international organizations, not less.  They wanted to be 
reassured that they were working collectively  and effectively, not individually, to manage the forces 
behind the reality of globalization.  Moreover, he believed they sensed that more needed to be done to 
enhance that partnership and they were right in their assessment.  In this context, today's meet ing was 
particularly noteworthy.  
35. The open trading system that had evolved over the past sixty years had contributed without a 
doubt positively and significantly to the global economy and had accommodated increased prosperity 
for many.  But, one also knew t hat the benefits were not evenly distributed.  Among other objectives, 
the Doha Development Agenda sought to find solutions to this very problem and bridge the existing 
divide.  In this regard, Canada fully supported developing practical remedies within th e WTO 
agreements themselves, to meet the goal of integrating developing countries, and in particular the 
poorest among them, into the trading system.  
36. The present meeting was crucial because it had become clear that not all of the solutions 
could be found i n the context of the WTO.  That said, it was equally clear that the pursuit of the DDA 
would benefit all Members.  And, as Canada had stated on several occasions, central to providing 
tangible, real and lasting benefits to developing -country Members was im proved market access, a 
point stressed by both Mr.  Wolfensohn and Dr. Köhler in their presentations.  
37. Bilaterally, Canada was also contributing by providing LDCs with quota -free and duty -free 
access to virtually all imports from the 48 countries, with very  liberal and progressive rules of origin.  
In addition, together with other partners, Canada was actively pursuing initiatives to strengthen 
technical assistance and capacity -building  at the WTO, as well as through multilateral, regional and 
bilateral chan nels.  He believed that the WTO's commitments on trade -related technical assistance in 
Doha broke new ground and the partners in coherence should continue to build on and refine this 
foundation based on their shared experiences and results.  He added that one should be candid about 
what worked and do more of it and be equally candid about what didn't work and begin to do less of 
that. WT/GC/M/79  
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 38. The Doha Declaration also acknowledged the central importance of achieving greater 
coherence in global economic policy -makin g and noted that the challenges faced by Members could 
not be addressed only through trade measures.  At the national level, trade liberalization was 
conducted in the context of macroeconomic reform and broader development frameworks.  Canada 
was a staunch  supporter of the importance of improving domestic policy coherence in support of trade 
integration and specifically giving more attention to trade issues and needs in national development 
plans.  As some had already mentioned, coherence did, indeed, start  at home.  
39. Internationally the framework for trade was connected to broader globalization issues 
including finance and development, and policy coordination between the three organizations was 
particularly relevant in this context.  The Secretariat paper hig hlighted the many valuable exchanges 
that had already taken place between the WTO and the Bretton Woods institutions.  The paper also 
made a number of promising suggestions for further coherence in the work of these institutions.  In 
this connection, he st rongly supported the proposals in the Secretariat paper to make even more use of 
such instruments as the WTO Trade Policy Reviews, Article  IV reviews, the Country Assistance 
Strategies and, of course, the Poverty Reduction Strategy Papers.  The IMF had con ducted important 
analytical work, highlighting the potential gains from greater market opening and complementary 
internal reform – for example, recent studies showing that the impact of trade liberalization and other 
related policies could outweigh that of  aid.  The IMF's direct contribution to operational work in the 
WTO in relation to certain balance -of-payments and exchange arrangements was well established and 
would continue to be an essential part of the relationship between the two institutions.  The World 
Bank had supported a more effective participation of developing countries in these negotiations and 
continued to make important contributions through its analytical work as well.  He encouraged the 
World Bank to intensify the assistance it provided t o facilitate developing -country integration into the 
multilateral trading system and particularly in respect of getting trade into development – for example 
through national poverty reduction and economic development plans.  Finally, he fully supported 
inviting the World Bank and the International Monetary Fund to the TNC in an observer capacity.  
This would make a critical contribution to deepening the understanding of these key international 
institutions of the complexities and Members' concerns and inter ests in the Doha Development 
Round. In short, observership would be a simple and practical embodiment of putting coherence to 
work on an everyday basis in Geneva.  
40. In conclusion, Canada expressed the hope that the present meeting would provide new energy 
and renewed momentum towards a more coherent joint venture between the three institutions.  
Members should carefully reflect on the ideas and suggestions that had been, and would be, offered 
during the meeting, since they contained the agenda for future meet ings and initiatives, and the 
elements for greater collaboration.  In the pursuit for greater multilateral coherence, one should not be 
timid in advocating new ways, or in critically evaluating old ways because only through a candid 
process of reform would  one be able to deliver on the aspirations that were at the heart of all citizens.  
41. The representative of Japan  said that he was convinced that further coherence would have a 
positive influence on development.  Limiting his remarks to two particular issues,  he said that on 
coherence on policy analysis, it was clear that in order to reap the benefits of trade, domestic reform 
was crucial.  As stated by previous speakers, coherence began at the national level.  Practical analyses 
on trade and development polic ies could better equip countries to manage the process of trade 
integration.  He welcomed the ongoing work on the erosion of preferences and that on fiscal revenues 
in light of tariff reductions.  Further work could address such issues as:  (i)  how servic es 
liberalization could affect domestic industry and the economy;  (ii) how optimal liberalization in 
financial services could lead to economic growth through stability and efficiency in financial  
transactions, and  (iii) how sustainable economic developm ent was supported by strengthening  the 
supply side and by enhancing transparency and competitiveness in economic transactions.  Deepened 
contacts could allow for the sharing  of concerns between the three organizations.  On the second 
issue, in the view o f his Government, trade -related technical assistance should have the  WT/GC/M/79  
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 implementation of WTO rules and obligations and participation in the negotiations at its core.  Japan 
had traditionally emphasised the importance of the benefits of market access and hope d that the IMF 
and the World Bank would continue to strengthen their  capacity -building activities.   
42. The representative of Gabon  supported the intervention by Morocco on behalf of the African 
Group and said she would like to make three  points.  The first  was on the consistency of advice from 
the IMF and the World Bank with WTO rules.  In the past, she had heard opinions expressed by the 
other two institutions which were contradictory to WTO rules.   Second, she suggested an annual 
conference bringing trad e, finance and development Ministers together which would enable them to 
take more integrated decisions. Budgetary restrictions on the poorer countries could prevent the 
necessary internal coordination unless these joint meetings were encouraged by the ins titutions. Third, 
she referred to the limitations of per capita income as a development indicator where Gabon was 
classified as a middle -income country but lacked the necessary labour force.  
43. The representative of Switzerland  said that there was no need to  justify the growing 
interaction between WTO and the Bretton Woods institutions.  The case was obvious and the 
Secretariat Note (WT/TF/COH/S/7) retraced the many links systematically.  Nevertheless, before 
commenting on some further possible improvements, he wished to recall certain limits to interaction 
imposed by the complementary roles of the three institutions.  The IMF and the World Bank advised, 
financed and assisted their developing country members, and particularly the low -income ones.  They 
did thi s intensively and more and more through staff residing in the countries or regions.  Most 
development issues were covered, including trade.  On the other hand, the WTO first and foremost 
provided the forum for the international community to negotiate trade  rules and to promote trade 
liberalization. Aside from the WTO activities related to technical assistance and capacity -building, 
inter-institutional tensions might easily arise.  
44. The present meeting was all the more welcome as an occasion to examine how the se relations 
could be more coherent.  The Secretariat had suggested improvements in terms of coherence;  
Switzerland wished to elaborate on some improvements they considered essential.  Where 
developing -country  Members were sometimes at a loss, was with w hat they perceived as conflicting 
signals coming from WTO requirements and norms and the advice coming from the World Bank and 
the IMF.  This was one reason why the discussion should be more intense at the country level. One of 
the ways to reflect on the d iscussion would be a much stronger presence of both institutions in trade 
policy reviews of a single country;  his delegation for one would welcome a more systematic 
participation.  
45. Switzerland appreciated the lead role that the World Bank had taken on the Integrated 
Framework and would like the World Bank to go further, assuming more permanent tasks in policy 
implementation and capacity -building beyond the initial sector analysis.  This would only be possible 
if World Bank country teams gave high priority t o trade matters in their staff allocation and budgets.  
He understood that this was exactly the intention of the President and the new Trade Department, but 
there were many other demands made on country teams.  And, of course, this priority could only hold  
if a specific Member country wanted the World Bank to engage. Switzerland would also like to see 
the Integrated Framework rapidly expanded to other low -income countries, again with a dynamic 
support role for the World Bank.  
46. His delegation also advocated m ore active support from the IMF and the World Bank in the 
accession process.  The support could be three -fold:  (1) to prepare analytical studies and action plans 
(like the Diagnostic Trade Integration Studies);  (2) to coordinate external support for poli cy 
adjustment and capacity -building;  and (3) to help establish concrete policy benchmarks for accession.  
47. The world had learned its lessons in the financial disturbances of the last decade on how 
critical the financial sector was for sustainable growth.  A s the Secretariat Note had indicated, the WT/GC/M/79  
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 right sequencing of establishing sound prudential regulations, building solid financial institutions and 
opening the market to capital flows was essential.  This was one aspect of the important negotiations 
taking place in services, and Switzerland hoped to see the wealth of experience that was embodied in 
financial country assessments by the IMF and the World Bank appropriately reflected in the 
negotiations.  
48. Finally, Switzerland commended the World Bank for having strengthened considerably its 
research in trade policy:  a close look at the negotiating realities was essential for the research to be 
relevant.  Therefore, his delegation approved the suggestion that the World Bank's presence as 
observer be extended to t he TNC and its main subsidiary bodies.  He expressed a particular interest 
that the coherence and justification of special and differential treatment be deepened and become a 
real tool for the negotiations in the next month.  
49. The representative of China  said he was grateful for the opportunity to have a dialogue with 
the heads of the IMF and the World Bank and thanked Dr.  Köhler, Mr. Wolfensohn and Dr. Supachai 
for their insightful statements. His delegation was pleased to note that there already existed a s trong 
basis for the IMF, the World Bank and the WTO to work closely together.  Over the past years, there 
had been frequent exchanges of data and publications, seminars had been organized, and technical 
assistance activities had been jointly sponsored by t he three institutions all of which had played a very 
positive role in the work of coherence.  
50. He hoped that this trend would continue and that cooperation between the WTO, the IMF and 
the World Bank would be further strengthened. More specifically, he wishe d to see greater coherence 
in the following areas.  First, more cooperation on policy analysis:  in a world of great 
interdependence, the three international organizations were playing a central role for financial 
stability, poverty alleviation, trade expa nsion and economic development.  It was fair to say that what 
decisions they were going to take and what rules they were going to set would have great impact on 
the quality of life of people in the remotest corners of the planet.  Therefore, it was importa nt that 
before any decisions were taken prudence should be exercised by thorough and detailed policy 
analysis and, to that end, closer cooperation.  Trade liberalization was very important, particularly the 
opening of markets to products of interest to the  developing countries. Both the World Bank and the 
IMF Heads had emphasized the central role of agriculture for developing countries, and for this 
Round, and China deeply appreciated their comments.  While making the policy analysis, it was 
important to be ar in mind the fundamental interests of the great majority of people in the world, 
particularly those people in the developing and least -developed countries who were faced with the 
tremendous challenge of developing their economies, integrating themselves into the world economy 
and improving their daily life. Considering the mission of the World Bank and IMF for poverty 
reduction and financial stability, and the development round launched by the WTO, there was every 
reason for the three international organi zations to place the development dimension right at the centre 
of their policy analysis.  China hoped that future policy analysis would continue to place emphasis on 
the actual conditions of countries with different levels of economic development, challeng es and 
concerns.  For many developing countries, economic reform, the opening of markets for goods and 
services, and the liberalization of the financial sector needed to be properly sequenced.  Members 
should be allowed the flexibility to choose the rate a nd timing of their import liberalization, otherwise 
it could be counter -productive and could lead to falling shares of world trade, declining terms of trade 
and unsustainable levels of foreign debt for the developing countries, a situation to be avoided fo r the 
sake of development. For this purpose, he hoped the World Bank and the IMF would support the 
endeavours of developing countries to make special and differential (S&D) treatment an important 
principle in the WTO.  
51. Second, coherence on technical and fin ancial assistance:  technical and financial assistance 
played a vital role for the full participation of developing countries in the multilateral trading system.  
With abundant financial resources as well as considerable experience and expertise, the IMF a nd the  WT/GC/M/79  
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 World Bank were in a better position to collaborate with the WTO in technical assistance activities 
covering a wide range of trade -related areas, from agriculture and services to standards, and fiscal and 
customs reform.  In his view, technical assi stance should be demand -driven and should meet the needs 
of the developing countries in sectors which they believed were most important for them.  It should 
also cover the area of assessing the impact of past rounds of liberalization and improving the capa city 
of developing countries to participate in the negotiations.  
52. Third, coherence on trade policy advice and conditionality:  in this connection he noted that  
there had been concerns amongst developing countries on macro -economic and trade policy advice 
and conditionality in extending loans for countries with balance -of-payments problems.  Some of the 
advice had been given mainly on the basis of an academic concept instead of taking fully into 
consideration the actual economic situation of the countries co ncerned.  Some of the conditions 
attached to loans had not taken into account the flexibility available under the WTO rules for 
developing countries and, more  particularly, LDCs.  For example, some Members had had to make 
commitments in some service secto rs under these conditions even though as developing countries 
their obligations under the WTO were optional.  Improvements in this area would bring greater 
benefits for the developing countries that were in financial difficulties.  
53. In conclusion, he stated that he was greatly encouraged to see the cooperation that already 
existed between the WTO, the IMF and the World Bank at the highest level and his delegation looked 
forward to greater coherence and closer cooperation in the future.  
54. The representative of Kenya wished to thank the Chairman for his initiative in organizing the 
present meeting.  She also wished to thank the Heads of the three organizationsfor sharing their views 
on the subject matter before the Members.  She associated her delegation with the statement made by 
Morocco on behalf of the African Group and thanked the Secretariat for its comprehensive and 
elaborate background paper.  Kenya took note and shared some of the views expressed in the 
Secretariat's paper. Her delegation appreciated the co ntinued commitment of the IMF and the World 
Bank in supporting the Doha Work Programme.  Developing countries attached a great deal of 
importance to the issue of coherence in global economic policy -making and the role that the IMF and 
the World Bank could play to ensure smooth integration of developing countries into the multilateral 
trading system.  In this regard, her delegation wished to make a few remarks to contribute to the 
discussions.  
55. Kenya believed that the success of the Doha Development Agenda an d the ability of 
developing countries to take advantage of the opportunities arising therefrom should not be taken for 
granted.  In the past, trade reform and liberalization had not yielded the anticipated gains but rather 
had contributed to de -industriali zation, poverty and import surges thereby resulting in negative 
economic growth in the poorer developing countries.  This had been aggravated by the structural 
adjustment programmes (SAPs) initiated by the Bretton Woods institutions.  The implementation of  
IMF/World Bank conditionalities had gone far beyond the Uruguay Round commitments;  most 
developing countries had therefore liberalized further than the Uruguay Round requirements.  In 
addition, the SAPs had in some cases conflicted with WTO obligations a nd these had reduced the 
flexibilities available to developing countries in national policy formulation.  In this respect, there was 
urgent need for closer cooperation and coordination between the IMF/WB and the WTO in 
identifying and supporting appropriat e policies for development while at the same time allowing 
sufficient policy flexibility in each developing country.  Furthermore, the loan conditionalities of 
these institutions should not nullify or impair the rights and obligations of the developing cou ntries 
under the WTO.  
56. It was also her delegation's view that the World Bank and the IMF should enhance their 
financial and technical assistance to developing countries to enable them to mainstream trade policies 
in their national development programmes.  T his should be complemented with a clearly defined and WT/GC/M/79  
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 integrated technical assistance programme to developing and least -developed countries focusing on 
the following areas:  assistance to cope with adjustment costs arising from trade liberalization and 
particularly revenue losses due to m.f.n. tariff cuts and loss of trade preferences;  human and 
institutional capacity -building, for example the Trade Policy course for English - and French -speaking 
African countries taking place in Nairobi and Casablanca, res pectively, should be made permanent;  
financial assistance to address supply -side constraints and product diversification;  and enhancing the 
participation of developing countries in the multilateral trading system.  
57. In conclusion, she expressed the view th at there should be a new practical approach to 
coherence between the World Bank, the IMF and the WTO for the benefit of Members.  In this 
regard, developing countries should be accorded flexibility to choose the rate, sequencing and the 
timing of their imp ort liberalization.  
58. The representative of  Australia  welcomed the initiative to convene the present meeting and 
hoped that another meeting (perhaps a bit more interactive) on the same subject could take place in 
the future.  He agreed with Gabon that it was  important that trade and finance ministers meet.  
59. He had drawn five main points from the discussion.  The first was that the greatest 
contribution to coherence by the WTO was to get on with the negotiations and complete them by 
2005.  The second was that t he greatest contribution to be made was in the area of agriculture.  The 
third point was that the major responsibility in agriculture lay with the developed world.  The fourth 
point was that there was enormous potential for South -South trade, and the fifth  point was that 
preferential schemes were not a lasting solution for development.   Australia appreciated the work that 
was being carried out by the IMF and World Bank on policy analysis in this area and he hoped that 
the heads of the organizations could c omment further on tariff and other trade preferences.  The WTO 
Director -General had mentioned that there was concern amongst developing countries on the impact 
of trade  liberalization  on revenues, on net food importers and on trade preferences.  In curre nt 
discussions in the WTO on agriculture the view had been expressed that further tariff cuts should be 
limited in order to ensure that preferences were not undermined.  Australia considered this position to 
be quite alien to the findings of the research c arried out by the Fund and the Bank and to be 
inconsistent with the origins of the GATT where it was understood that preferences should not 
undermine multilateral liberalization.  This was not a new problem,  It had been grappled with in 
Havana when the m. f.n. principle had been created but clearly there was a concern that multilateral 
trade liberalization would affect some more than others.  One way to deal with this was to get a better 
handle on the magnitude of the problem.  From  a reading of the analys is carried out by the Fund and 
the Bank, Australia had concluded that, in aggregate terms this problem was very small, the potential 
loss compared to overall gains was infinitesimal and  only a few countries would face losses and only 
in a few commodities.  One needed to consider structural  programs to enhance these countries’ 
international competitiveness, to enable them to adjust their economies, and to manage compensatory 
financing.  This, however, was not an issue that the WTO was equipped to deal with – such specialist 
advice and programmes were best found in the Bank and the Fund.  Australia welcomed Members' 
comments on how these issues could be best dealt with.  
B. RESPONSES FROM MR WOLFENSOHN AND DR KÖHLER  
60. The President of the World Bank  said that the Bank’s research on trade preferences would 
find that, in spite of some losses, there was no reason not to pursue the multilateral negotiations.   
Preferences  had a weak track record, were under -utilised and diverted business from non -preferred 
exporters w ho might be poor or poorer than beneficiaries. While aware of the politics underlying 
preferential arrangements, the Bank was willing to make the results of its research available.  He said 
he was impressed with the consensus view that the three institutio ns could and should do more on the 
coherence issue, both in terms of  analysis of economic and social effects and also in relation to 
capacity -building.  This fitted exactly with the Bank’s own position. Cognisant of the lack of a strong  WT/GC/M/79  
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 trade agenda in th e CAS and PRSPs, the Bank was trying to reinforce this activity.  As to the 
Integrated Framework,  which exemplified the greatest sense of coherence,  he acknowledged that 
changing the rules of the trade agenda could only provide benefits  when countries c ould take 
advantage of new access opportunities. The Bank’s development paradigm – building infrastructure, 
improving access to  education, building capacity – concerned the practical aspects of positioning 
developing countries to take advantage of  opport unities created by the trading system  and to cope 
with difficulties created as a result of liberalization.  In conclusion, he noted positively the strong 
affirmation, evident during the discussions,  of  support by WTO ambassadors for this three -way  
partnership on coherence.  
61. The Managing Director of the International Monetary Fund  then offered his own comments 
on the discussion so far.  He noted, first of all, that the objective of coherence was to facilitate growth 
– growth was not everything but without  it one went nowhere.  Trade was a major vehicle for growth; 
this varied from country  to country  but openness to trade was good for growth.  In the debate on 
globalization it was clear that what was needed was increased participation where, of course, th ere 
were risks as well as opportunities.  Specifically, in his view, the IMF’s role included doing more for 
crisis prevention, while the IMF had embarked on a broad process of change and reform – conscious 
of the difficulties of conditionality this had bee n streamlined – still, some form of conditionally was 
needed in order to ensure performance.  In his experience, less open economies were more crisis 
prone.  In Latin America, for example, greater trade integration of economies with excessive debt 
would be  a means of preventing crises.  He shared India's view that there should be no ideology and 
that no "one size fits all".  In other words, there had to be careful sequencing of capital account 
liberalization.  While there was no quick fix solution and more time might be required, the objective 
must remain openness,  because the poor could gain from increased openness. He pointed out that the 
role of sound institutions had been underestimated – in the absence of a government  that could 
enforce the rule of la w, liberalization would not work.  He considered that the IMF should work 
harder to preserve financial stability, focusing on the appropriate exchange rate regime.  Here too, 
there was no "one -size-fits-all" although evidence suggested that flexibility ena bled an economy to 
cope more readily with shocks.  In sum, realistic exchange rates were a basic ingredient for 
integration. Technical assistance by the IMF, the WTO and the World Bank was vital, as, in his 
experience, the obstacle to fuller integration wa s often not the absence of political will but a lack of 
capacity. He believed that the IMF should, and could, accelerate its work on tax regimes to ensure that 
these were not biased against exports. He considered that there was no excuse not to finalize th e Doha 
Round by the deadline and to make Cancún a milestone in its success, adding that the IMF should not 
be identified as a culprit.  It was for everyone to make the necessary efforts.  The still fragile global 
economy needed the boost that would be prov ided by showing that the international community could 
pull together in the same direction.   He agreed that there needed to be better coordination between the 
Trade, Finance and Development Ministers.  Finance Ministers were very aware of the importance o f 
trade.  He noted the points raised with respect to WTO rules and the fact that they offered greater 
flexibility than some of the Fund’s conditions and said he would investigate this. With respect to tax 
revenue loss, he believed that  much of this could be avoided by reining in tax exemptions.  As for 
trade preferences, the view that these were good for the poor was exaggerated;  the long -term goal  
should be m.f.n. liberalization.  
C. STATEMENTS  
62. The representative of Jamaica  considered that the presence of t he heads of the three 
international organizations was an unmistakable signal of the importance that the international 
community attached to coherence in global economic policy -making, and he expressed his delegations 
appreciation for the detailed and infor mative documentation before the General Council.   
63. The first point his delegation wished to make was that coherence was not an end in itself.  
What it achieved was much more important.  The nature of the policies that would be the subject of WT/GC/M/79  
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 the  coherent approach was more important than the fact of coherence itself.  In the field of trade, 
Jamaica believed that the value of coherence should be judged by whether or not the Marrakesh 
objective was brought closer as a result of coherence. In other words, it s hould contribute to, or should 
serve to ensure that developing countries, and especially the least developed among them, secured a 
share in the growth in international trade that is commensurate with the needs of their economic 
development.  Regrettably, t his objective was not being met.   The World Bank’s Operational Trade 
Agenda,  set out in a document of 9 April 2003, made the point that the poorest developing countries, 
including the least developed among them, had not performed at all well.  The LDC’s share of exports 
had fallen from 3% in the pre -liberalization 1950s to 0.5% currently.  This reality suggested that a 
number of priorities related to coherence – which Jamaica was pleased to see – were in fact receiving 
attention and were areas of focus of  the Bretton Woods institutions' work.  Perhaps this should lead to 
more analytical work and objective reflection on the relationship between trade and growth and 
development. It was known, however, as in the case of projected welfare gains from previous a nd 
current rounds, that it could always be argued – and often was – that the problem lay in anaemic 
domestic reforms.  Jamaica welcomed the operational programmes and the analytical work that was 
taking place in areas of interest to the three institutions and to their Members:  such as on supply -side 
constraints;  aspects of market access, including import and trade facilitation;  trade preferences;  
adjustment support;  trade and financial liberalization;  and RTAs  and special and differential 
treatment.  On the matter of preferences, a subject in which Jamaica had an interest, he referred to the 
comments made by the representative of Australia, drawn from paragraph 21 of the Secretariat paper, 
and the recent IMF study estimating welfare losses from prefer ence erosion. This was an area which 
required further objective analysis and assessment with a view to reaching an acceptable solution.  He 
had found the strongly held views of the Managing Director of the IMF on the matter of  preferences 
interesting,  Ja maica’s only comment, at this stage,  on the question of whether trade preferences were 
good or bad for the poor, and whether or not they should be dismantled was that consistency would 
seem to suggest that one could not, at the same time, maintain that tr ade preferences in the form of 
duty- and quota -free treatment would be good for least -developed countries, while at the same time 
maintaining that preferences were bad for, or hurt, other capacity - and supply - constrained 
beneficiaries who received them.  Jamaica believed that certain specific policy measures needed to be 
addressed in order to ensure coherence and consistency in the interests of many developing countries.  
These included Bretton Woods institutions' conditionalities and their relationship to  Members’ WTO 
obligations with special concern being given for the pace and sequencing of liberalization, the 
avoidance of cross -conditionalities and the preservation of policy flexibility. Jamaica also believed 
that the different policy emphases of the mu ltilateral institutions might also need to be reviewed or 
debated, from time to time, so as to identify contradictions and inconsistencies, should any exist, 
particularly any which might pose an unreasonable burden on Members.  An example of this was the 
fact that for several decades, developing countries were encouraged to pursue export -led growth by 
the Bretton Woods institutions and encouraged to provide a range of incentives to attract foreign 
investment.  Many developing countries did this and establis hed export zones.  Many of these 
activities had now been classified as prohibited export subsidies by the WTO and were illegal.  With 
hundreds of thousands of jobs, and many percentage points of gross domestic product at stake, it was 
not sufficient to mak e apologies.  Jamaica  hoped that strengthened coherence would address such 
issues in the future and would even anticipate them before they occurred.  The objective should not be 
constricted policy space and increased cross -conditionality, but more develop ment-friendly rules all 
round. Finally, he noted that, correctly, attention had been paid to the importance of domestic reforms 
in developing countries.  In this context his delegation believed that the macroeconomic policies of 
major players, as well as t he trade policies applied in key sectors, had an important bearing on global 
trade and on the trade opportunities of developing countries. Jamaica considered that an examination 
of developed country macroeconomic policies and their implication for global t rade and global growth 
would be, and should be, an important aspect of trade -focused economic coherence.  
64. The representative of Indonesia  thanked the heads of the three organizations for their succinct 
and comprehensive remarks, which his delegation believe d were mutually supportive.  Indonesia, like  WT/GC/M/79  
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 many others, shared the view expressed by the WTO Director -General in the Secretariat paper  
(WT/TF/COH/S/7) that obtaining coherent global economic policy -making was one of the core 
functions of the WTO since i t would bring to Members a well functioning, open rules -based, trading 
system that would be more predictable and conducive to the developing -country Members.  
65. His delegation was pleased to note that over the past years, cooperation among the three 
instituti ons had focused in particular on assisting developing and least -developed countries to take 
greater advantage from their involvement in international trade.  The real question that had to be 
tackled in the WTO, however, was how to take a meaningful trade a nd development agenda forward.   
What would be the next steps?  In this regard, he wished to raise some points upon which Members 
could reflect.  First, real progress needed to be made this year on the mandated WTO negotiations on 
agriculture.  As the WTO Director -General had pointed out in paragraph 3 of the Secretariat paper, 
"rural poverty is the most corrosive and endemic form of poverty in the world and continuing high 
barriers and subsidies to agricultural trade are a large part of the problem", and I ndonesia therefore 
considered that a start should be made on reducing these barriers and subsidies. Second, debt relief 
would help poor countries to save more of their existing resources, and only increased exports would 
allow them to generate new ones.  T heir share in world trade should not be shrinking and what could 
be done immediately was to improve their market access opportunity.  Third, increasing technical 
assistance and training by providing assistance in all matters relating to implementation of W TO 
obligations remained the responsibility of the WTO and its Members.  Indonesia supported the 
Director -General's intention to respond to the request by developing and least -developed countries for 
assistance in implementing their Uruguay Round commitment s.  However, these countries also 
needed help for their trade officials so that they would be able to play an effective role in the WTO's 
institutional machinery.  Fourth, the interlinkages between the different aspects of economic policy 
required that the  international institutions with responsibilities in each of these areas followed 
mutually supportive policies.  The WTO should pursue and develop cooperation with the international 
organizations responsible for monetary and financial matters, and should a void the imposition on 
governments of cross -conditionality or additional conditions.  
66. The representative of the European Communities  said that not only did the presence of the 
heads of the WTO, the World Bank and the IMF give a visible indication of the imp ortance attached 
by all parties to the continued pursuit of the Coherence mandate originally given to the WTO at 
Marrakesh, but their presentations also sent a strong political signal for making a success of the Doha 
Development Agenda (DDA).  A common fea ture in all the presentations had been that trade and 
investment liberalization, in combination with the right domestic policy mix and a supportive 
international environment, was essential for developing countries' sustainable development.  A 
successful ou tcome of the DDA – on time and in line with the agenda and orientations given by 
Ministers – would raise global welfare and contribute to sustainable development.  As noted in the 
Secretariat paper, the DDA would also complement the efforts being made to f ollow up the Monterrey 
and Johannesburg Conferences and would contribute towards the achievement of the Millennium 
Development Goals.  
67. The development focus of the Doha Development Agenda was crucial.  It would be delivered 
by both the negotiations on marke t access and by those on rules and needed to be complemented by 
adequate capacity -building and technical assistance.  Without the latter, actual market opening could 
prove to be elusive.  Special and differential treatment elements should support integrati on of 
developing countries into a single system, rather than create a two -tier system based on numerous opt -
outs.  The policy research and direct support given by the Bank and Fund in this area could help 
ensure that this objective was achieved.  Similarly  – as with the arrangements for net -food importing 
countries agreed during the Uruguay Round – the financial and technical support of both institutions 
could be an important prop to those WTO Members, particularly the developing and least -developed 
countri es, which might face short -term adjustment costs before the full benefits of the DDA were felt. 
While continued efforts to promote policy coherence at the international level were of course WT/GC/M/79  
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 necessary, it should be remembered that policy coherence began at home, at the national level. This 
was as true for developed countries as it was for developing countries, even if the policy challenges 
were different.  Where the Bank and Fund were actively supporting the national strategies of 
individual countries, it wa s important to ensure that these paid adequate attention to trade issues.   
68. His delegation agreed with the Director -General that trade -related technical assistance and 
capacity -building remained the priority item for cooperation between the three organizat ions.  The net 
result should be the further mainstreaming of trade considerations into technical assistance 
programmes, building up from an effective integration of trade into national poverty reduction and 
development strategies. Without such mainstreamin g the development contribution of the DDA would 
never reach its full potential.  
69. Already in the year 2000 the EU had identified trade as one of six priorities of its 
development policy.  Since Doha, the European Commission had systematically raised the issu e of the 
link between trade and development with its development partners across the world, which had 
resulted in the inclusion of trade in most of its country and regional strategies.  The pipeline of 
funding available for trade -related assistance amounte d to some €2 billion for the next five years, an 
amount that was likely to increase, if developing countries so wished, through the mid -term review 
process of its Country and Regional Strategy Papers.  This funding ensured appropriate continuation 
of the p resent stock of trade -related projects, which amounted to €1.5 billion and its levels 
demonstrated that the EU was fully committed to the trade and development agenda. This, however, 
could only lead to real change on the ground and integration of developin g countries into the 
multilateral trading system, if the developing countries themselves integrated trade into their national 
and regional development policies.  Difficult choices had to be made to achieve such integration and 
ownership.  The EU would cont inue to work together with the IMF, the World Bank, and other 
international agencies and bilateral donors, and would continue to provide full support for this 
process.  Policy development and the provision of trade -related technical assistance, ranging fro m 
regulatory and institutional development to supply -side development, was crucial for the creation of 
an enabling investment climate that was attractive to both local and foreign investors.  
70. The Integrated Framework (IF) was an excellent example of the coh erence mandate at work 
and since its revamping just two years ago much had been achieved, in particular as regards its key 
objective of integrating trade into national development programmes and poverty reduction strategies.  
There was tremendous value in assessing development policies and initiatives from the point of view 
of their trade effects and, through trade, of their impact on economic growth.  Economic growth that 
outpaced population growth was ultimately what gave countries the opportunity to crea te appropriate 
educational systems, health care, and social security systems that increased the welfare of their 
people.  International trade could be an engine for economic growth, and the IF was designed to 
harness a coherent and integrated approach.  Ba sed on experience so far, the Community had come to 
the conclusion that strong and early involvement of national government boosted country ownership, 
which was the key to making the IF work.  At the same time, early consultations with the donor 
community would allow immediate follow -up to the Diagnostic Trade Integration Studies and would 
limit the need to revert to Window II of the IF Trust Fund.  If this process was managed vigorously, 
funding would be available from bilateral and multilateral donors, an d from the private sector, for the 
whole range of projects and programmes, from institution building to supply -side development and 
productive investments.  
71. Trade liberalization and market access were crucial components of the Doha Development 
Agenda – be it in agriculture, non -agriculture or services.  As already alluded to by the head of the 
IMF, trade growth was key for economic growth and poverty reduction, but strong and enhanced 
WTO rules could also help in monitoring financial stability.   WT/GC/M/79  
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 72. As acknowledg ed by the interesting work carried out in the WTO Working Group on Trade, 
Debt and Finance, the existence of a strong rules -based system played an important role in providing 
economic stability, predictability and security, in particular in periods of econ omic or financial crisis.  
WTO rules indeed rendered recourse to protectionism more difficult and helped keep markets open so 
as to ensure that crisis -hit economies were able to continue counting on exports as a source of foreign 
exchange and income growth .  For example, a successful conclusion of a WTO agreement on 
investment could be a key factor to improving financial stability and security which were essential to 
increase the flow of FDI, in particular to developing countries.  A successful conclusion o f an 
agreement on trade facilitation would be a very important contribution by the WTO to the 
improvement of customs management.  
73. In conclusion, his delegation welcomed the possibility of holding meetings such as the 
present one, and considered them the bes t possible expression of the joint coherence effort of the three 
organizations.  Members should build on this and work for an ever -enhanced cooperation on policy 
analysis, trade -related technical assistance and beyond.  Effective coherence between trade, f inance 
and development policies were at the heart of a global approach towards a better and more equitable 
world.  
74. The representative of Korea  expressed his delegation's appreciation of the opportunity to 
discuss this important issue of coherence in general  economic policymaking together with the 
Managing Director of the IMF and the President of the World Bank.  He also  thanked the Secretariat 
for its Note (WT/TF/COH/S/7 ) prepared in consultation with staff of the IMF and the World Bank, 
which he found very useful and which he felt provided a lot of food for thought.  
75. Coherence in global economic policymaking was a comprehensive issue and should be 
addressed from three  different angles : development, the relationship between trade liberalization and 
financial s tability, and institutional cooperation between the WTO and the international financial and 
monetary institutions.   Seen from the development perspective, increased market access for 
developing countries could  play a key role in advancing the coherence age nda.  As pointed out in 
paragraph  2 of the Secretariat 's Note, the WTO could  make a meaningful contribution in the current 
circumstances by moving ahead with the work of the Doha Development Agenda. The increased 
market access which would result from the s uccessful conclusion of the DDA negotiations would  
make a clear contribution to more coherent trade, financial and development policymaking.  
76. He then turned to the issue of coherence on the basis of the relationship between trade 
liberalization and financi al stability. These two concepts  in general  were mutually reinforcing in the 
sense that trade liberalization characterized by, among other things, increased market access for goods 
and services , could  enhance financial stability thereby contributing to coh erence.  
77. Most recently, the Asian financial crisis had highlighted the relationship  between them . The 
global economy overcame the Asian crisis fairly successfully, in part thanks to the stability and 
security provided by the multilateral trading system bas ed on the WTO rules. As the Secretariat paper 
pointed out in para graph  38, the rules of the trading system acted as a shock absorber, keeping 
markets open and ensuring that the financial crisis was not translated into a trade crisis too. 
Nonetheless , durin g the Asian financial crisis, the affected countries experienced difficulty in securing 
access to traditional instruments of trade  financing. In this regard, it was encouraging to note that the 
IMF and the World Bank were now seriously reviewing options fo r supporting trade -financing during 
financial crises.   The Asian financial crisis had also served to highlight the importance of stable 
exchange rates for conducting international trade transactions. The issue had been raised in the form 
of claims of "unfair trade " against large currency devaluations in the  crisis -hit countries under the 
IMF bailout programme. This was another area of cooperation between the IMF and the WTO where 
meaningful coherence could be achieved.   With regard to this last point , i.e. the institutional 
cooperation between the WTO and the IMF /World Bank , he wished to focus on the need to ensure WT/GC/M/79  
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 consistency of policy advice and prescription of the IMF with the rules and disciplines of the WTO. 
As indicated in para graph  50 of the Secretari at paper, one example of potential conflict between the 
IMF advice and the WTO rules was the emergency measures introduced in conditions of financial 
crisis by a Member  in close cooperation with the IMF/World Bank  to restructure  its financial and 
corporate  sector which might be challenged  under the WTO rules,  including under the dispute 
settlement procedures . Korea had raised this issue at  the meeting of the  Working Group on Trade, 
Debt and Finance in December last year, and wished to highlight some of the  key elements. . 
78. During the Asian financial crisis, which began in 1997, the IMF and the World Bank had 
provided Korea with emergency bailout loans, and, as part of IMF conditionality , the Korean 
government had pursued policies that were designed to overcom e its structural economic problems.  
The Korean Government, in line with the recommendations of the IMF, had restructured its financial 
sector in order to consolidate the banking institutions and to enhance their financial soundness.  The 
important element s of these measures had been discussed between the Government of Korea and the 
IMF, and were reflected in Korea's Letters of Intent to the IMF.  The disbursements of IMF loans 
were contingent upon these Letters of Intent.  In the initial stage s of financia l restructuring, a large 
amount of public funds were injected by the Korean Government into the financial sector to clean -up 
non-performing loans and to replenish capital.  The total public funds injected amounted to $125 
billion.  This inevitably resulted  in government equities in financial institutions.   However, such an 
increase was temporary in nature as plans were prepared for reprivatization of the commercial banks.  
Re-capitalization with public funds raised government ownership of commercial banks f rom 17% at 
the end of 1996 to 58% at the end of 1998.  The Korean Government started re -privatizing 
commercial banks in 1999, and government ownership declined to 34% at the end of 2001 ;  
reprivatization was set for completion in the next 2 years.  Further more, as called for in its Letter of 
Intent to the IMF dated 24 November  1999, the Korean Government ha d faithfully abided by the 
principle that even under government ownership, the financial institutions would  operate on a fully 
commercial basis without g overnment intervention in the day -to-day management of the process.   As 
a result of these efforts, the financial sector evolved into an industry driven by market principles, 
returning to profitability in early 2001 and Korea  had succeeded in overcoming the  financial crisis, 
repaying the full amount of its emergency loan of $19.5 billion from the IMF in August 2001, 2 years 
and 8 months ahead of schedule.  As of July 2002, the average capital adequacy ratio for banks had 
risen to 11.4% from 6.7% in 1998.  Th is was way above the BIS benchmark of 8%.  The Government 
had to date recovered about 35% of the public funds injected and expected to achieve a redemption 
ratio of over 50% in the near future.    
79. Nonetheless, the imp lementation  of financial reform by the K orean Government, as agreed 
with the IMF  and the World Bank , had become the basis for a legal challenge as inconsistent with 
Korea ’s WTO obligations by some WTO Members who actually encouraged Korea to follow IMF 
conditionalities.  They claim ed that the me asures taken by Korea during the financial crisis constitute d 
actionable subsidies under the WTO rules.  This claim stem med from a lack of understanding of the 
joint efforts made by the IMF , the World Bank , and the Korean Government which aimed at financia l 
and corporate restructuring.  In accordance with the understanding it reached with the IMF  and the 
World Bank, and based on extensive national consultations , the Korean Government set up a 
mechanism through which debtors and creditors could make use of t he out -of-court workout debt 
restructuring programme whereby they could agree on the conditions for the rescue of ailing 
companies.  Moreover, the corporate restructuring programme did not specifically target any 
individual company or industrial sector.  U nder the workout program me, debt forgiveness, equity 
infusion and interest relief were provided on commercial grounds by the financial institutions 
concerned, which acted in accordance with market principles.   Korea was  concerned that to allow 
measures tak en under the guidance of the IMF  and the World Bank  to be challenged in the WTO 
would have the perverse effect of penalizing Members who em barked on necessary financial reforms 
as recommended by the international financial institutions.  This would not onl y go against the goal of 
achieving greater policy coherence between the WTO and the IMF but would also have far -reaching  WT/GC/M/79  
 Page 19 
 
 
 implications for the efforts of the IMF and the World Bank to rescue countries from financial crises in 
the future.  
80. Finally, he wished to draw attention to paragraph  11 of the Secretariat Note where reference 
was made to the need to identify the best institutional vehicle within the WTO for consulting with the 
IMF and the World Bank.  Korea believed that this was a most relevant issue whi ch merited further 
consideration given the increasing importance of coherence in global economic policymaking and 
cooperation between the WTO, the IMF and the World Bank.  Such a body would perform a useful 
function in overseeing the issue of coherence on a permanent basis, including in the areas of 
cooperation identified so far.  Korea welcomed and would continue to support any initiative of the 
WTO, the IMF and the World Bank to enhance coherence in global economic policymaking.  In this 
regard, Korea sto od ready to share with other WTO Members its experience gained during the Asian 
financial crisis in exploring ways to prevent, as well as respond effectively to, financial crises in the 
future.  
81. The representative of Cuba  noted that recent world trade figur es published by the WTO 
reflected the growing political and economic uncertainty in the world today, a situation prejudicial to 
economic growth and development and one that would likely give rise to greater instability 
throughout the world.  These words we re borrowed from a recent speech by the WTO Director -
General. The weak recovery of trade in goods during 2002 had taken place in the midst of a 
weakening world economy, reduced investment flows, exchange rate volatility, lack of business 
confidence, an inc rease in trade restrictions and increased geopolitical tensions.   Latin America had 
witnessed one of its worst years, falling output had led to unemployment of 9.1%, the highest figure 
of the 1990s.  All this led Cuba to point out the importance of cohere nce world -wide of international 
institutional policies and the need to link international trade expansion to exchange rates, and balance 
of payments adjustment.  Abrupt fluctuations in exchange rates were destabilizing on trade, through 
inflationary pressu res and the difficulties of servicing debt.  Financial flows were unfavourable to 
developing countries, private flows outweighed official flow, (the latter had fallen by 5% in the last 
decade) making financing more expensive.  Private debt had grown by 24% , bank loans had been 
replaced by equity investment making capital more volatile.  In her view, the present economic and 
financial system did not meet requirements and reform initiatives had not been effective.  She 
considered that few developing countries  had benefitted from trade liberalization and most had seen 
their economies de -industrialize as foreigners competed with national industries in their own markets.  
Infant industries in developing countries should be protected and products must satisfy thes e types of 
concerns.   She also expressed the view that international cooperation should aim to identify new 
procedures for debt renegotiation.  At present, these were totally one -sided in favour of the creditors.  
Her Government attached great importance to the goal of 0.7% of GDP in official development 
assistance, a goal which was yet to be achieved.  She also encouraged the three institutions to exercise 
coherence on development, and identify provisions for special and differential treatment so that 
developing countries could benefit from the Doha work programme.  This was essential to build the 
confidence to move the process forward as quickly as possible.  
82. The representative of Paraguay  hoped that initiatives such as the present meeting would lead 
to na tional and international coherence and through the horizontal application of policies, would allow 
for the effective participation of developing countries in the multilateral trading system in order to  
promote the objective shared by all of equitable grow th and poverty reduction.  He flagged three 
points that Paraguay considered to be key issues.  First,  the need to concentrate efforts on confidence 
building, as mentioned by the IMF, in the context of the Doha Round.   Australia  had voiced  his own 
count ry’s concerns that progress in the agricultural negotiations was paramount – in his view, the 
World Bank and the IMF could help to overcome obstacles to reform in agriculture.   Developing 
countries had had to adjust structurally, cope with instability, li beralize immature economic sectors, 
and eliminate subsidies to strategic sectors, all of which were harsh conditions in order to be able to 
participate in the trading system.  These were still prerequisites of the international institutions for any WT/GC/M/79  
Page 20 
 
 
 assista nce that they might obtain from these institutions   He went on to say that protectionism in 
sectors vital to developing countries, such as agriculture, was preventing development; a way needed 
to be found to encourage certain developed countries to recogn ise the need for reform.   This was the 
balance that should be found.   The IMF had referred to the necessity to cooperate in financial services 
and investment.  These sectors were important in the structural reform process of developing 
countries, but it was also necessary to receive outward -oriented assistance in sectors in which 
developing countries were already competitive.   Modalities for credit for autonomous liberalization 
had recently been adopted in the Council on Trade in Services and efforts sho uld be focused there in 
order to allow developing countries to participate effectively in the services negotiations. Finally, the 
IMF  had referred to special and differential treatment and had broached a very important subject, 
access to markets, which wa s essential to promote financial stability and to generate sustainable 
solutions to problems of external debt. In this case, when the World Bank and the IMF designed 
preferential trade programmes for lower income countries, they should take into account th e effects 
that such measures had on non -preference receiving low -income countries. The full participation of 
developing countries should be studied globally;  sometimes, doing good for some could create major 
difficulties for others.  Finally, he quoted fr om paragraph 5 of the Secretariat Note:  "The IMF and the 
World Bank have the means to support a successful conclusion to the Doha market access 
negotiations in a variety of ways" and said that Paraguay believed in this statement and trusted it 
would mater ialize.   
83. The representative of Pakistan  expressed his appreciation of the convening of the present 
meeting and also of the fact that the WTO Director -General had attended the IMFC meeting in April.  
Many delegates had referred to dealing with coherence at  home among the Ministries of Finance, 
Commerce and Economic Development. Pakistan felt that to a large extent such coherence already 
existed in most countries.  What was needed was the same coherence at the international level. The 
question was how to mak e it more concrete. In paragraphs  10 and 11 of the well -drafted Secretariat 
paper, some suggestions for increasing coherence had been put forward.  Pakistan agreed with those 
recommendations, but considered that one should go beyond those recommendations. In this 
connection, the suggestions made by the IMF could make a real difference.  
84. One of the points made had been financial support for reforms.  In his view, thanks to 
financial support from the IMF for countries with balance -of-payments difficulties, ver y few countries 
now sought waivers for restricting imports.  As the current Chairman of the Committee on Balance -
of-Payments Restrictions, he could say that there was not a single request pending in that Committee. 
However, the IMF's support, available at very low interest rates, was generally understood to be for 
imports of manufactured goods. The IMF had another facility for supporting import/export of 
agricultural commodities known as the Compensatory Financing Facility (CFF). Because this loan 
was made available at high interest rates, there was not much demand for this facility, and he 
suggested that access to the CFF could be made more flexible for countries which might need 
financial assistance to help cope with agricultural reforms and loss of prefer ential access to markets. 
Thus market access reforms could be supported and sustained by the IMF’s financial support. 
Alternatively, the IMF might support a proposal being discussed in the WTO for a special 
development fund for food imports/exports.  
85. As to  surveillance of trade policies, he noted that this was being done by the WTO to a certain 
extent through Trade Policy Review and the Annual Overview of Developments in the Trading 
System by the Director -General.  These were routine exercises with no mecha nism for follow up.  A 
similar exercise by the IMF would be repetitive unless there were a follow -up. Furthermore, the IMF 
could put a lot of pressure on borrowing countries but not on countries which did not require IMF 
financing.  
86. Concerning technical as sistance and capacity -building, the Director -General had made serious 
efforts in this regard and earlier this year there had been a joint paper on coherence in technical  WT/GC/M/79  
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 assistance with the OECD. If this could be extended to the IMF and the World Bank it w ould be more 
cost-effective and would yield even better results.  
87. His delegation welcomed the key points in the context of the Doha Development Agenda 
identified by the World Bank.  The priorities mentioned were:  reform of agriculture and cutting of 
subsi dies;  a rational framework on S&D and a generalized approach for achieving this treatment;  
and enhanced market access.  The Director -General had also stressed greater market access as the key 
to achieving a successful Development Round. The joint efforts  of the three institutions could 
contribute to lowering barriers, especially for products of export interest to developing countries.  He 
urged that the objective of any coherence should be better globalization and more trade opportunities 
for countries wh ich had not been able to expand trade and thus achieve a desirable level of growth and 
avoid marginalization. He encouraged the Director -General to continue his good work, noting that 
efforts towards achieving more coherence were also a way towards ensurin g timely completion of the 
Doha Round.  
88. Pakistan's own experience of working with the three international organizations showed that 
developing countries could make full use of international trade instruments if there was 
"developmental coherence" in the pol icies of the three organizations. One example of this he noted 
was tariff liberalization in Pakistan. The IMF's approach was tough and was based on 2 -3 year targets. 
The WTO had a soft approach and tariff -cutting rounds could be of a much longer duration.  In 
addition, there was scope for exceptions. As a result of its tariff reform programme with the IMF, 
Pakistan had reduced its applied tariff rates drastically. However, bound tariff rates (where WTO was 
concerned) were still high. In order to protect loc al industry against any unfair trade practices such as 
dumping, Pakistan needed to make use of the WTO’s trade remedy laws such as anti -dumping or 
countervailing actions.  Because Pakistan had not breached tariff bindings, there was no mechanism 
for protec ting their industry – so, he concluded, other countries, but not those following reform 
programmes, could have recourse to trade remedies.  
89. Along with previous speakers, the representative of Chile  expressed appreciation for the 
initiative leading to the c onvening of this meeting, as well as for the background information provided 
by staff and the presentations by the heads of the three international organizations.  He wished to 
make three brief points: he recommended a collective analysis, something that w as not done often, of 
the situation of the world economy, trade and investment so as to reach a collective conclusion as to 
its projected behaviour and how to define domestic policies within that context.  Together with this he 
believed a critical analysis  of trade policies and their coherence with the objectives of the WTO, in 
cooperation with the Fund and the Bank, would be valuable.  In noting the examples cited by Korea 
and Pakistan, his delegation considered that it was important to ensure consistency between the 
institutions and the policies defined at the national level.  Turning to technical assistance, he said that 
this had been referred to as a major axis for coherence.  In his delegation's view, the main interface 
was something different.  Everyth ing done in the WTO implied adjustment to social, economic and 
political costs.  These required, particularly for the weakest, support from the international community 
through the different institutions. The Bank and the Fund had been informative about wha t they could 
do about designing fiscal policy to compensate for lost income because of falling customs levies.  The 
Bank had also done a considerable amount to improve the regulatory framework in services which 
facilitated liberalization.  His delegation c oncurred with Australia who had stressed that trade 
preferences should not become an obstacle to liberalization, neither should their removal cause 
dramatic effects on the lives of many people in poorer countries.  The erosion of preferences was 
occurring through unilateral liberalization and bilateral arrangements but it was important to know the 
magnitude of the problem within the multilateral context.   In doing away with farm subsidies, which 
would improve the market access situation for developing coun tries, it was important to know who 
would pay, who would provide compensatory payment, and who could act on the supply side. The 
Bank and the Fund could contribute significantly to the adjustment process.  These were the three WT/GC/M/79  
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 areas where he felt cooperati on should be strengthened and should be exercised on a more regular and 
systematic basis.  
90. The representative of Barbados  said his delegation also looked forward to participating in 
similar meetings on coherence in the future. He explained that his was a ve ry open, but small, 
vulnerable developing economy.  Barbados was a net food -importing developing country and also a 
preference receiving country with a share of trade in goods of such significance that it was recorded in 
the statistics of the WTO as 0.00%.   Barbados depended essentially on trade in services for its 
development and hoped that in the future, in the absence of an appropriate global structure, it would 
not face situations where organizations in some developed countries tried to enforce rules th at would 
harm its services sector.  Barbados was one of the countries that would suffer from the erosion of 
preferences.  While its share of trade in goods was not significant in terms of world trade, it was 
nevertheless important within its small economy.   Therefore, any loss in that trade would have an 
immediate impact on the level of economic activity and would have major social and other 
implications.  Barbados would undoubtedly have to make serious adjustments.  He had listened 
carefully to what both t he Fund and the World Bank had said on preferences, but his delegation was 
not convinced and would appreciate clarification on two things.  First, what was the degree of 
distortion that a share of trade of 0.00% created in the international goods market if  allowed to 
remain, and second, how were the Bank and the Fund thinking about helping countries such as 
Barbados to make the necessary adjustments, bearing in mind that Barbados had no access to funds 
from the Bank. Barbados would also lose revenue from th e reduction and elimination of tariffs and 
that, too, would make further adjustments necessary.  This was not a question of tax reform.  With 
assistance from the Fund, Barbados already had a VAT of 17.5% in place since 1996, and there were 
only a very smal l number of exemptions in the present import duty or VAT regime.  This was further 
evidence that one size really did not fit all.  
91. Here, too, he would be grateful if both the Fund and the Bank could tell him how they were 
thinking about helping countries su ch as Barbados to craft policies and make other adjustments that 
would become necessary in due course from the eventual elimination of tariffs on industrial products.   
As a small developing country he believed that the best prospects for Barbados to obtai n just and 
equitable treatment in this world was through a strong multilateral system.  Therefore, Barbados 
favoured multilateralism and fully supported the efforts being made by institutions such as the Fund, 
the Bank and the WTO to work together to devel op coherent policies for their Members.  His 
Government also subscribed to the necessity for coherent policies at the domestic level but experience 
had also taught that, without similar coherence at the international or global level, countries like his 
would always be left at the periphery.   Barbados followed the debate on the merits of globalization 
and liberalization with keen interest because it was painfully aware that while they offered potential 
benefits, there was no system in place to guarantee tha t those benefits were distributed in an equitable 
manner.  One reason for that was that while the proponents spent much time focusing on global 
welfare gains they did not spend an equal amount of time advocating the implementation of a system 
of good globa l governance which would ensure social and economic justice for all countries.  Thus, 
small countries such as Barbados that were at the margin were always faced with the struggle to avoid 
disappearing from the planet.  In conclusion, he said he would be gr ateful to learn of any ideas the 
Fund and the Bank had on the issue of good global governance and how it could be guaranteed.  
92. The representative of Egypt  expressed appreciation for the opportunity to listen to the views 
that the WTO, the World Bank and the  Fund had on the very important issue of "Coherence in Global 
Economic Policy -Making".  He supported the statement by Morocco, the coordinator of the African 
Group, and wished to reiterate once more his appreciation for the valuable cooperation that had be en 
taking place between the WTO and both Bretton Woods institutions since 1996, and for the very 
rewarding and promising technical assistance that they provided.  However, with the complexity of 
the trade agenda, he believed that more technical assistance was needed to help ensure a better future 
for the developing world, mainly through the achievement of higher degrees of poverty reduction and  WT/GC/M/79  
 Page 23 
 
 
 financial stability.  He also believed that the Bretton Woods institutions were well placed to study and 
analyze t he negative impacts that might result as part of the outcome of the negotiation process, and to 
reflect on the different potential remedies that might possibly offer adequate compensation.  
Supporting national trade policy reforms and providing capacity -building and technical assistance for 
the marginalized countries, or those developing countries in need, were prerequisites to ensure a 
viable and comprehensive multilateral trading system.  However, although that in itself was 
important, he believed that th e crux of the matter lay in market access, and in collectively taking 
practical steps to improve this situation for developing -countries' exports, and to refrain from adopting 
measures and rules that would further marginalize the interests of the weak.  Fi nally, he expressed the 
hope that the WTO would arrive expeditiously at a consensual decision concerning observer status on 
all pending requests by international or regional intergovernmental organizations which did not yet 
enjoy the same level of cooperat ion through memoranda of understanding or agreements.  This would 
pave the way for the cooperative relationship between the WTO and the two esteemed Bretton Woods 
institutions to develop even further, with the primary objective of achieving optimal levels of 
coherence in global economic policy -making.  
93. The representative of Oman  said that her delegation agreed with other Members that had 
highlighted the importance of enhancing cooperation and coordination between the WTO, the IMF 
and the World Bank. Technica l assistance and capacity -building for developing countries was also 
important, especially for recently acceded countries that had made extensive commitments and which 
would need more time to adjust and implement them.  In this regard, she wished to mentio n the 
importance of special and differential treatment for developing countries, which, when given in the 
form of transitional periods, could assist these countries to adjust in a more flexible and appropriate 
manner.  An assessment of the financial and hu man resource difficulties faced by some new Members 
in their attempt to implement their extensive commitments could help the coherence group to 
understand better the problems faced by developing countries and the type of technical assistance they 
needed.  Finally, her delegation also considered it important to hold meetings on the issue of 
coherence and she supported Egypt regarding the status of observership for regional and international 
intergovernmental organizations.  
94. The representative of Colombia  said he was pleased to hear that the IMF was updating its 
study on the exchange rate volatility and implications for international trade in response to concerns 
expressed by the Working Group on Trade, Debt and Finance.   This type of interaction between the 
WTO and institutions such as the Fund and the Bank should be welcomed.  The Working Group had 
been set up at Doha in response to concerns over matters of coherence voiced by WTO Members.  He 
understood that the Fund was considering further research initiati ves related to trade financing, a topic 
often discussed in the Working Group.   He had taken note of the World Bank’s Report “Global 
Development Finance 2003:  Striving for Stability in Development Finance” which was an important 
theme allowing  developing  countries to benefit fully from the multilateral trading system.  He 
mentioned, however, that he had not found anything in that report on the subject of trade financing. 
On the subject of preferences and their erosion, this was a clear -cut example of wher e coherence 
could be expressed in a positive manner as regards progress in the Doha negotiations.  Finally, work 
on coherence should avoid overlap and one needed to be realistic as to what could be done.  In order 
to reap the greatest benefit from this typ e of meeting in future, preparations could be foreseen well in 
advance and input for discussion sought from subsidiary bodies such as the Working Group on Trade, 
Debt and Finance.  
95. The observer representative of the United Nations  referred to the previous year’s International 
Conference on Financing for Development which had covered a very broad agenda, including trade, 
and which had produced the Monterrey Consensus agreed to at the highest level by the same countries 
that were represented at the present me eting.  One of the themes of that Consensus referred precisely 
to the aspect of  coherence.  In the last chapter, entitled "Addressing systemic issues, enhancing the 
coherence and consistency of the international monetary, financial and trading systems in support of WT/GC/M/79  
Page 24 
 
 
 development",  world leaders said "In order to complement national development efforts, we 
recognize the urgent need to enhance coherence, governance, and consistency of the international 
monetary, financial and trading systems.  To contribute t o that end, we underline the importance of 
continuing to improve global economic governance and to strengthen the United Nations leadership 
role in promoting development”(paragraph 52).  They went on to say that “To strengthen the 
effectiveness of the glob al economic system’s support for development, we encourage the following 
actions:  Improve the relationship between the United Nations and the World Trade Organization for 
development and strengthen their capacity to provide technical assistance to all cou ntries in need of 
such assistance (paragraph 64).  We thus commit ourselves to keeping fully engaged, nationally, 
regionally and internationally, to ensuring proper follow -up to the implementation of the agreements 
and commitments reached at the present Co nference and to continue to keep building bridges between 
development, finance and trade organizations and initiatives within the framework of the holistic 
agenda of the Conference".  Finally, in perhaps the most important part of the document, which was 
entitled "Staying Engaged" and in which a mechanism was set up for implementing and following up 
on the results of the Conference, the world leaders said “We encourage the United Nations, the World 
Bank, the International Monetary Fund, with the World Trade  Organization to address issues of 
coherence, coordination and cooperation as a follow -up to the Conference, at the spring meeting 
between the Economic and Social Council and the Bretton Woods institutions" (paragraph 68), which 
would heretofore also inclu de the WTO.  The UN had just held that meeting on 14  April,  and he was 
pleased to have noted WTO representation, both by the Ambassador of Ireland, and by the Secretariat.  
He applauded and welcomed the current discussion but felt that the UN must also be  involved, 
particularly in view of the commitments agreed to by the heads of state at the Monterrey Conference. 
He felt that the ECOSOC meeting which would be held in April every year in New York, the day 
after the Development Committee, had the potential to grow into something very important.  It would 
depend of course on the political will of the member states, the same representation as for the present 
meeting, and on the collaboration between the UN and the WTO, which he noted had been growing 
rapidly.  The UN representative considered that the spring ECOSOC meeting provided an opportunity 
and a place where the discussion on coherence could be further pursued and strengthened.  
D. RESPONSES FROM IMF  AND WORLD BANK STAFF  
96. The representative of the IMF began wi th the issue of preferences and said that a research 
note had been prepared at the IMF regarding the magnitude of the impact of preference erosion on the 
balance -of-payments position of countries currently benefitting.  The result of that study had been th at 
very few countries were expected by the IMF to suffer significantly from the effect of preference 
erosion.  Most countries would be only very mildly affected.  At the same time, there were a handful 
of countries identified in that note which would most likely experience a stronger impact and this 
would need to be dealt with.  The IMF, as had been mentioned by its Managing Director, was 
currently reviewing its facilities to see how it could respond more flexibly to economic shocks, 
including those from pr eference erosion.  There were two components to that review.  One was the 
review of the CFF, a non -concessional facility which made it rather expensive for countries which 
were most in need of this facility.  This aspect of the facility would be reviewed i n June by the 
Executive Board.  At the same time, the Fund was reviewing how its concessional facility, the PRGF, 
could be adjusted to allow for more flexible and rapid responses when there was a need for financing 
shocks.  Most of the cases where such fin ancing could be required were likely to be related to 
commodity price swings or sudden loss of export markets, such as tourism, after events such as 
"September 11th".   Preference erosion, in as much as it could have a rapid and substantial impact on 
the b alance -of-payments, would certainly be something that could be considered under revised 
facilities. In this context, there was also a question as to whether the IMF was being consistent in 
being sceptical about preferences while at the same time supporting  duty- and quota -free access for 
these countries.  In the current trading environment, the IMF had been consistent in its view that duty - 
and quota -free access for LDCs could make an important contribution.  It had, however, underlined 
that this should be viewed as a temporary form of assistance which should not stand in the way of a  WT/GC/M/79  
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 broader multilateral liberalization.  In his view, the window offered by preferences should be used to 
strengthen the ability of economies to participate on a sustainable basis  in world trade and, as had 
been indicated, work on the supply side by both the World Bank and the IMF would seem to be 
particularly relevant in this context.  
97. On conditionality, there had been several remarks on the sequencing of trade reforms in the 
conte xt of Fund programmes.  The Fund was currently reviewing, on a case -study basis, Fund 
programmes that incorporated trade -related conditionality in the 1990s with a view to seeing whether 
any lessons could be learned for the appropriate design of the timing , phasing and sequencing of these 
measures together with other structural reform measures. At present, the number of trade -related 
conditionalities in Fund programmes was relatively low.  As the IMF Managing Director had 
mentioned, there had been an exerci se at the IMF during the past few years to streamline the use of 
structural conditionalities and that had also applied to trade conditionalities which were relatively rare 
and more often than not directed at administrative and governance objectives rather than at broad 
liberalization objectives.  With respect to inconsistency of trade conditionality with WTO rules, he 
had listened to Pakistan's remarks and said that it was certainly not the IMF's objective to proscribe 
the use of sensible safeguards, and if  inconsistencies did exist then here this was something that would 
have to be looked at.   He did not consider this a general problem but rather one which should be 
considered in its specific circumstances.   
98. With regard to financial crises and ways to pro mote trade or its resumption, the most 
important contribution the IMF could make was to help re -establish financial stability and confidence 
that would boost investment in export sectors.  Financial instability was probably one of the more 
important deterr ents to the development of a healthy export sector simply because investment became 
unpredictable in that context.  Another important contribution was the re -establishment of appropriate 
levels of the exchange rate which should help promote export -oriented  recovery.  This had been seen 
in several recent financial crises in whose wake exports were the main motor of recovery; 
macroeconomic policy had a role to play in this regard.  A third area touched upon was trade finance 
which had dried up very rapidly in  a number of recent capital account crises.  The IMF would shortly 
be holding a seminar on trade finance, the purpose of which was to consider whether official finance, 
including from the Fund, could play a role in sustaining trade finance in crisis situat ions.  There had 
been positive examples in Indonesia and Brazil, for example, which could perhaps be built upon in 
this context. In relation to the statement by Korea, the IMF subscribed to the situation described.  
Korea had managed a rapid and highly suc cessful recovery.  A very important component of that 
recovery was the restructuring of its banking and corporate assets.  This had also been a central 
element in the discussions between the IMF, the World Bank and Korea about the design of its 
programme.  That process had been based on market principles.  As a general matter, the IMF did not 
monitor industry -specific details but the central role that financial restructuring had played was fully 
in accordance with the Fund’s view of this episode.  
99. Referring to trade preferences, the representative of the World Bank  said that this went to the 
heart of the special and differential treatment discussion. He underscored the Bank’s view on S&D 
that it was valuable to have duty - and quota -free access across the boar d for very poor countries and 
that a clearer definition was needed of what constituted very poor countries.  But it was also important 
that all countries accept the basic WTO disciplines of moving towards m.f.n. and non -discrimination 
and the progressive r eduction in tariff barriers;  this was pro -development.  Trade was pro -
development and adoption of trade disciplines across the board was an important part of the WTO  and 
this would be good for developing countries.  At the end of the day, preferences woul d gradually be 
eroded as reduction in m.f.n. tariffs over time reduced the preferential margins. He also considered 
that it was necessary to look specifically at individual country circumstances.  While not a universal 
problem, there were special cases cal ling for assistance from the Bank and the Fund.  The virtue of 
multilateral trade liberalization dealing with a broad set of issues was that one would give in some 
areas and gain in others, avoiding therefore the temptation of looking at every sector indep endently WT/GC/M/79  
Page 26 
 
 
 and focusing on only the negative aspect.  Hopefully, as a result of the negotiations there would be a 
widening of markets and opportunities to improve efficiency at home, some of the gains that would 
help offset the preference erosion which was a n inevitable consequence of a system where trade was 
ultimately free.   
100. Regarding conditionality, as far as the World Bank was concerned, this was not what it used 
to be. There might have been a time when conditionality was imposed in exchange for large -scale 
adjustment lending but this was no longer its style.  The Bank’s approach was one of working 
together with the government to see where the government wanted to go and to offer support in that 
direction.   There were instances in which governments wishe d to move forward and liberalize 
unilaterally, for which the Bank hoped they would receive credit.  Thus, conditionality was part of an 
agreement and a way of setting targets and measuring success.  He agreed with Chile regarding the 
crux of the relationsh ip between the three organizations. Technical assistance and capacity -building 
was an important plank but coherence was a much broader process of trying to encourage countries, in 
both the North and the South, to try to adopt a set of policies towards trad e which were consistent 
with overall development objectives.  The Integrated Framework Diagnostic Trade Integration Studies 
exemplified a very broad approach to promoting integration into the world economy.  From these 
came specific recommendations, some o f which were in technical assistance but many of which 
related to a broader reform process across a wide spectrum.   In conclusion, he said that for the World 
Bank, the crux of the Development Round was market access and the crux of that was in agriculture , 
which was the most distorted area of economic activity, especially in the countries of the North, while 
also being the area where 70 % of the poor in the world lived.  
E. CONCLUDING REMARKS  
101. The Director -General   said that, at this critical time,  political c ommitment to multilateralism 
in economic policy -making was more important than ever to enable all countries to share in the  
prosperity that globalization offered.  All three institutions were working in the same direction to 
achieve the Millennium Develop ment Goals, particularly concerning the reduction of poverty.  The 
combination of  strengths should create the right momentum towards a fruitful management of the 
globalization process. Although coherence of policies and activities would not automatically solve  
global economic problems, it provided the foundation on which economic, and particularly trade 
measures, could be built in the most concrete manner.  Coherence was therefore not a goal in itself but 
a process to achieve the goals of sustainable deve lopment through trade expansion and financial 
stability.  The present meeting reaffirmed the full effort to work together in a constructive and 
substantive manner.  This was already happening in various areas of trade -related technical assistance 
for which  more resources could be mobilized, especially to build up institutional and supply capacity 
in developing countries.  More could be done to enhance cooperation in trade -related technical 
assistance, a joint study had been completed to determine areas of f urther joint activities.  The 
Integrated Framework, for instance, should be a major beneficiary of cooperation on expanding post -
DTIS study work to implement the recommendations.  Trade factors should feature more prominently 
in PRSPs and CAS.  It had been  useful to discuss with the Bank and the Fund the need to support 
Member countries in their adjustment efforts as a result of trade liberalization.  On the one hand, it 
was necessary to work together to determine how to facilitate the post -DDA adjustment  and the 
channelling of adjustment costs.  Obtaining adjustment support for the post -DDA implementation 
phase should ease some countries’ difficulties and reluctant participation in the ongoing negotiations.  
On the other hand, it was necessary to address t he concerns of countries which would have to meet 
their public revenue targets, and those countries which would need to cope with the erosion of 
preferences as a result of multilateral agreements.   He recognized that everyone had benefited from 
the presen ce of  the heads of the Bank and the Fund and he personally appreciated very much their 
generous spirit of cooperation.  He was sure that everyone wanted to strengthen cooperation and it 
was in this spirit that, together with the delegations that had spoke n, he hoped that the long -standing 
problem of observership of the two organizations in the TNC and its subsidiary bodies could be  WT/GC/M/79  
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 resolved.   There was no doubt in his mind that the WTO Members, and developing countries in 
particular, would gain from havin g the Bank and the Fund able to follow and support the negotiations.  
Therefore, he wished to have the backing of Members to invite the Bank and the Fund as observers to 
the TNC and its associated bodies, in line with the WTO’s cooperation agreement with t hem, on the 
understanding that this would not prejudice any Member’s position on wider issues of observership.  
At a time when the WTO was looking for assistance from these institutions, it was important that the 
WTO implement its part of the cooperation a greement fully and so help them to help the WTO.  Both 
the Managing Director of the IMF and the President of the World Bank had reaffirmed their support 
for the DDA and for the DDA to finish as scheduled.  They had pledged further support to mainstream 
trade into the development process and the WTO should carry on with work to bring this into action.   
He hoped that the present meeting had been useful for Members and looked forward to arranging 
another such meeting in due course.  He reiterated his thanks t o Dr. Köhler and Mr.  Wolfensohn and 
commended the outstanding organizational work of the coordinators  of the three institutions.     
102. Before adjourning the meeting, the Chairman  said that he did not intend to summarize the 
discussion since the WTO Director -General had, to a great extent, already done so, but he wished to 
join others in expressing his feeling that this had been a very rich and useful meeting with valuable 
contributions.  Not only had the Bank and the Fund made a political commitment to the D oha Round, 
but he had taken note of the personal commitments on the part of  Dr.  Köhler and Mr.  Wolfensohn.  
As a result of the meeting, there was a clear recognition of the benefit of cooperation and 
collaboration between the three institutions, which was  being strengthened, and acknowledgement 
that more must be done in respect of coherence, both with regard to policy analysis as well as to the 
field of technical assistance and capacity -building, and to ultimately establishing coherent links 
between trade,   financial and development policies.  
 
__________  
 
 WT/GC/M/79  
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 Annex 1  
 
 
Statement by Dr. Horst Köhler,  
Managing Director of the International Monetary Fund  
 
 
1. I thank you very much for inviting me to address this meeting today. Just last month, we had 
the benefit of Dr. Supachai’s presence and his thoughtful contribution at the meeting of the 
International Monetary and Financial Committee of the IMF, at which he received full support from 
Finance Ministers and Governors representing our 184 members. My visit today underscores the 
urgency that the IMF attaches to concrete progress toward multilateral trade liberalization and our 
readiness to contribute our share to international policy coherence.  
2. Our meeting takes place against the background of continuing uncertain ty in the world 
economy. The end of the war in Iraq has improved the balance of the risks. But in order for the world 
to seize the upside potential, the overriding priority must be to work toward restoring global 
confidence to consumers and investors.  In a world of growing economic and political 
interdependence, this requires the credible demonstration of international cooperation. Strengthening 
international trade is a vital ingredient of confidence -building.  It will support the emerging economic 
recover y, and by demonstrating  a forceful commitment to the development agenda, it is also the most 
appropriate anti -dote to the risk of fragmentation among nations.  That is why a successful Doha 
Round is so important to me.  
3. The Doha Declaration is a powerful signal of the international community’s determination to 
tackle poverty decisively, and to ensure that the benefits of globalization are more widely spread.  The 
importance of trade for poverty reduction has been repeatedly emphasized since then, in Monter rey, in 
Johannesburg, and in the most recent communiqué of the IMFC. Trade is the key opportunity for 
developing countries to help themselves, by generating growth and reducing dependence on aid over 
time. But tremendous challenges remain. For many countri es, and for their poor, the global 
marketplace remains replete with obstacles.  Our task must be to remove these obstacles and provide 
the opportunity for all countries to reap fully the benefits of globalization.  
4. The Cancún Ministerial Meeting must be the  occasion to match rhetoric with action. 
Agriculture holds the key. According to the World Bank, 73 percent of the world’s poor live in rural 
areas and depend on agriculture for their livelihoods – not just in developing countries, but in 
emerging market e conomies as well. A genuine development round must have broad -based 
improvements in market access conditions for agricultural products, and a significant reduction in 
trade -distorting supports, at its core.  The primary responsibility here lies with the ad vanced 
economies, which need to put in place comprehensive reforms of their agricultural policies.  Without 
such reforms, and the opening of global trade in agricultural products, I fear that achieving the 
Millennium Development Goals will remain elusive.  
5. But the developing countries must, equally, embrace the opportunities offered by the global 
marketplace, while protecting the most vulnerable in their societies. South -South trade offers 
particular potential for growth but remains more restricted than tra de with industrial countries. I do 
not have to stress to this audience that lowering barriers to trade, within a multilateral framework of 
reciprocity and rules, has been the foundation of the tremendous expansion in global trade and 
prosperity in the seco nd half of the 20th century.  It has contributed to lifting more people out of 
poverty than at any time in history. Regional and bilateral preference schemes, while having the 
potential to assist the poorest countries temporarily, are no lasting alternativ e to a multilateral 
approach – and if they proliferate over time, they threaten the multilateral fabric of the system.   WT/GC/M/79  
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 6. Trade integration and the pursuit of sound macroeconomic and structural policies are 
mutually reinforcing.  Taking advantage of the oppor tunities of international trade requires economies 
to be flexible and efficient in their supply response, objectives promoted by IMF surveillance and 
programs.  Hence, coherence in the work of the IMF, the World Bank, and the WTO, and of their 
members, pla ys a critical role in supporting developing countries that have engaged in the 
international trading system and opened themselves up to international competition. Let me mention 
two specific examples of the need for a coherent approach: our efforts to assi st heavily indebted poor 
countries (HIPCs) return to growth and tackle entrenched poverty, and those aimed at strengthening 
the prevention of financial crises and supporting a rapid recovery.  
7. An open trading system is essential for tackling protracted debt  problems. The HIPC 
Initiative, which is a joint effort by the Fund and the World Bank, is now providing assistance to 26 
countries, which on average have seen the net present value of their debt service cut by two -thirds.  
But raising these countries’ lon g-term growth and ensuring debt sustainability depends critically on 
their better integration into world trade.  Agricultural subsidy policies in industrial countries that keep 
world market prices low discourage investment in key export sectors of the HIPC  countries.  The 
revenue lost by West African cotton producers as a result of subsidized cotton prices in advanced 
economies, for instance, far exceeds the HIPC debt relief they receive. With two million West African 
households dependent on cotton, the res ult is that fewer African children get an education – it is as 
simple as that. Moreover, subsidy programs tend to exacerbate price swings in world markets, further 
hampering the development of sustainable export sectors.  
8. Strong traded sectors also reduce c ountries’ vulnerability to crisis.  Experience has shown that 
countries with larger traded sectors are more resilient to shocks, and the ability to expand exports 
rapidly allows for a quicker recovery. Thus, coherence requires that trading partners offer m arket 
access opportunities that complement financial support to countries facing a crisis. Over the longer 
term, countries must make determined efforts to integrate into the international economy in a balanced 
manner: low trade integration combined with si gnificant foreign borrowing is a recipe for recurring 
instability.  
9. Institutional collaboration between the WTO and the IMF is working well.  The WTO -IMF 
Cooperation Agreement, signed in 1996, has spurred an extensive network of exchanges and joint 
endeavou rs at all levels of our institutions. The WTO Secretariat’s background paper provides an 
impressive overview and many specific examples of this cooperation.  The Doha Development 
Agenda calls for further areas of cooperation. The IMF is pursuing our joint agenda in at least four 
concrete ways:  
10. First, through our financial support for members. Dr. Supachai, in his address at the IMFC 
last month, mentioned that financial uncertainties linked to reform might deter WTO members from 
engaging fully in the Doha pr ocess. Let me assure you that the IMF is fully committed to assisting 
countries that face payments imbalances in finding the appropriate mix of adjustment and financing. 
This includes imbalances that might arise in the process of liberalization. If that re quires IMF 
financial support, we have the resources to deliver.  We are also reviewing the design of our 
Compensatory Financing Facility and of our Poverty Reduction and Growth Facility, with the 
objective of more flexible assistance to low -income countrie s facing significant exogenous shocks.  
11. Second, through Fund surveillance. Following the Doha Declaration the Fund’s Executive 
Board underlined the need for stepped -up surveillance of trade policies, especially in industrial 
countries whose policies are of  fundamental importance for the world trading system as a whole. We 
now have a track record of frank dialogue with our members about trade, both in the context of 
bilateral surveillance and through multilateral instruments such as the World Economic Outloo k.  WT/GC/M/79  
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 12. Third, through technical assistance. Technical assistance and capacity -building are crucial 
aspects of the Doha Development Agenda given the increasing complexity of the trade talks and 
policy, administrative, logistical and other constraints on trade that can limit the supply response. In 
the areas of its expertise, the Fund contributes actively to the Integrated Framework process, including 
to the Diagnostic Trade Integration Studies prepared under the leadership of the World Bank. Fund 
experts also p rovide significant and long -standing assistance for customs reform, tax and tariff reform 
– including to mitigate the revenue implications of liberalization – and for data improvements. We 
stand ready to further increase this assistance, in line with our m embers’ priorities.  
13. And finally through diagnostic studies and seminars.  The IMF Research Department is 
preparing a study of exchange rate volatility and trade, in response to concerns expressed at the WTO 
Working Party on Trade, Debt and Finance, and we  will transmit our analysis to you in the course of 
the summer. This follows research notes on certain issues in the special and differential treatment 
debate that we transmitted to the WTO recently. And the day after tomorrow, the Fund is organizing a 
major seminar on trade finance during crises, with a view to evaluating a possible role for official 
finance, including by the Fund.  A representative from the WTO Secretariat will attend the seminar.  
14.  Looking ahead, there is scope for further reinforcing our  cooperation in the area of financial 
services.  At the WTO,  progress in the financial services talks and the possible negotiation of an 
international investment framework, can make a key contribution to international financial stability.  
The IMF’s mandat e and ongoing work in this area suggests that close collaboration can be of 
significant mutual benefit, as illustrated by the seminar that the IMF conducted for the WTO Financial 
Services Committee last summer.  I would strongly welcome further strengtheni ng such informal and 
formal cooperation.  
15. In conclusion, cooperation is vital to help advance trade and financial integration.  
Institutional coherence between the WTO, the World Bank, and the IMF is strong.  I appeal to capitals 
to demonstrate the same co operative spirit in making decisive progress in Cancún next September.   WT/GC/M/79  
 Page 31 
 
 
 Annex 2  
 
 
Statement by Mr. James D. Wolfensohn,  
President of the World Bank  
 
 
1. Mr. Chairman, Director General, my colleague, Horst Köhler, your excellencies.  
2. You must understand that a fter eight years at the World Bank, it is the peak of my 
expectations to come and speak to this group which, I know, beavers away at the issues of trade, 
speaks a language that I scarcely understand but know to be important.  
3. To arrive here and, after a sig nificant briefing by my colleagues, to try and to get the language 
right is a hazardous task for someone who's just come from Bhutan.  
4. I tell you that because, in Bhutan, the issue of trade and finance is all measured in terms of 
human happiness and I nearl y stayed there because it seems so much simpler than the work that you're 
doing here, or indeed the work that we do at the Bank. But nonetheless, I came back because 
Dr. Supachai gave a remarkable presentation at the IMFC meetings and indeed my colleagues and I 
have, in recent years, sought to build the relationships that we have with this distinguished body.  
5. Putting it in my terms, the reason that we are here is that our daily work, in terms of poverty 
alleviation and the advocacy which we are engaged in, both in Monterey and Johannesburg, in 
relation to addressing the questions of poverty and improvement of social equity and the achievement 
of the Millennium Goals, about which my colleague Horst Köhler has spoken, all have at the center a 
range of importan t contributions that we speak of regularly. When we speak of Monterey and we 
speak of Johannesburg, we talk of a partnership between the developed and the developing countries, 
we talk about the undertakings on the part of developing countries to improve g overnance, to have 
legal and judicial reform, financial sector reform, to build capacity, to fight corruption.  
6. With NEPAD, in terms of the African countries, the actions have been taken not because 
they're forced but because the countries themselves have d ecided that these are essential preconditions 
to development.  
7. On the part of the developed countries, they have said: "If you do that we will give you 
support and capacity -building, we will increase the development assistance that is made available 
provide d that it is spent effectively"  
8. And then they say: "And we will open the markets for trade"  
9. And today it seems to me that we are addressing the question, dealing with this issue of trade. 
And when we talk about Coherence, it is integral to the work that we  are doing in the Bank, that trade 
be considered alongside each of these other considerations.  
10. And yet all too often the issue of trade is treated as a specialist subject, for specialists, without 
it being integrated into coherent discussion. We don't even  attend the meetings as observers in relation 
to trade. I'm not seeking it because frankly I go to enough meetings but if one were to be suggesting 
what was sensible, it would be sensible to have people around the table who are addressing the 
fundamental q uestion of development and we would be present to make whatever contribution we 
could in terms of trade, just as Dr. Supachai and WTO should be present in our bodies.  WT/GC/M/79  
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 11. But it is impossible to consider the question of development, the question of equity, as 
Horst Köhler has spoken, the question of economic development, without an integral consideration of 
the question of trade. It makes absolutely no sense to help countries boost their agricultural production 
if they have no markets. It makes absolutely no se nse to boost industrial production if tariffs and other 
inhibitions to trade do not permit the sale of goods and the manufactures.  
12. The issue of opening markets in developing countries to manufacturers from more efficient 
and more productive developed count ries is also something that as a matter of policy should be 
adopted but needs to be dealt with on the basis of understanding the fragility and the sequencing and 
the importance of giving support to developing countries so that they can adapt to the new con ditions 
of free trade as they are set up under the WTO agreements.  
13. So, at whatever level we are dealing, the issue of a coherent approach to development 
includes necessarily the issues of reformation of an economic structure, reformation of a social 
struct ure and reformation of a trading structure. And that is indeed what you're engaged in, in the 
Doha Round, and why it's necessary to bring about an integration of the considerations that we have 
in the IMF with the work that Horst and his colleagues are doi ng, and the Bank with the work that we 
are doing, and here, of course, in the work that you are doing.  
14. And may I say that my own judgment is that we have come a long way in terms of work at the 
staff level but I am absolutely delighted that we now have a c hance to engage at this level, which I 
think is all to infrequent in terms of exchanging ideas.  
15. So, I'm delighted to be here, and there are three particular areas that I'd like to address:  
The first, in terms of what we think is important, is the issue of coherence between trade and 
development in the field of agriculture. My colleague Horst Köhler has already addressed a number of 
these issues and you are very familiar with the rhetoric.  
16. We speak quite often of the $50 billion or so that is available in ov erseas development 
assistance, of the $300 -plus billion that is provided in agricultural subsidies, of the rather amusing 
statistic that the average European cow lives on $2.50 a day subsidy when 3 billion people live under 
$2 a day and, for the benefit of  my Japanese friends here, the average Japanese cow lives under a 
subsidy of $7.50 a day. These are, of course, eye catching statistics but they do, in fact, reflect the 
imbalance between the issue of subsidies and the issue of free and open access to mark ets in the area 
of agriculture. And given, as Horst reminded us, that the issue of poverty is so often a rural question, 
it is for us at the center of our considerations in terms of the alleviation of poverty. What we are 
looking for, as a matter of advoca cy for poor people, is what many of you are seeking, which is a 
better deal in terms of agriculture and that would allow for effective development and effective 
addressing of the question of poverty. We also recognize that this is not just a North -South is sue, that 
the South -South issue is equally important, that 25 percent of trade is in the South -South area, and that 
the importance of development is something that is already under consideration in your deliberations 
and which is important. We also recogni ze that speaking of freeing up markets will affect some 
people well, and will affect some people badly in relation to existing preferences, and that there will 
be a need for a period of adjustment.  
17. We have looked at a series of issues about what are needed  to be tackled.  
18. The one of course is the cutting of subsidies in OECD countries, especially those that have the 
greatest impact on production, using instead transparent, decoupled payments to support farmer 
incomes and meet rural development objectives.   WT/GC/M/79  
 Page 33 
 
 
 19. We are suggesting finding a tariff cutting formula that results in genuine cuts in tariff levels 
and tariff escalation in all countries and one which also gives credit for liberalization that is 
undertaken between negotiations.  
20. The conversion of Tariff Rate Quotas in agriculture and specific duties to ad valorem tariffs, 
which provide a more transparent protection.  
21. Find a safeguard mechanism which protects poor producers against import surges while 
encouraging tariff liberalization.  
22. The adoption of liberal un ilateral rules of origin under preference schemes such as the 
"Everything But Arms" agreement and the African Growth and Opportunity Act, especially for 
clothing and textiles, with these rules harmonized across countries.  
23. And let me add here, of course, th at while agriculture is at the center of what we are 
conceiving, it's not the only thing in terms of developing countries, and that the service sector, your 
work on TRIPS and Public Health and the anti -dumping discussions are all central to the work that w e 
are engaged in. And this is an area, these areas, are areas in which I think we're speaking and we're 
talking about, where it's obviously essential that we have cohesion in the discussions that are being 
undertaken here.  
24. And let me get now to the issue o f a rational framework for the Special and Differential 
Treatment, which is an area that I have spent now some hours on and will not set myself up as an 
expert. I'm sure all of you know a great deal more about it than I do, but I did ask my colleagues to a t 
least do a research paper for me to see if there was a way in which we could make some contribution 
and, as the Fund has also done, we too have explored this issue. And I've come up with some 
approaches which might be relevant and useful and which we're submitting to the Director General 
but which essentially seek to approach this not on the basis of individual treatment but try and come 
up with some more generalized approaches that would be worthy of consideration.  
25. Exploring the possibility of all export s from low income countries entering the OECD 
countries tariff and quota free and doing so, would simplify rules of origin.  
26. We recognize the problems faced in the poorest countries in implementing the WTO rules, the 
issue of capacity and resources, and let  me say here that we've been working for some time with the 
Secretariat in terms of trying to support the issues of training and capacity -building using a distance 
learning facility unit programs which we've devised together and which I believe have shown some 
merit and have been quite useful in the work that you're doing.  
27. We've also recognized that if you get rid of the S&DT, that in the poorer countries that have 
been asked to accept WTO principles, there is a significant element of fragility and that the  issue of 
timing and support and giving a basis on which there is a safety net, is something that in which, we, as 
the World Bank, can help. As you make decisions in relation to trade, we're a natural partner to assist 
the countries in terms of that safety  net and that support which is necessary.  
28. And the last thing, of course, is that, in the work that we're doing, as was mentioned by my 
friend Horst, is adding the poverty reduction strategy papers and in the strategies that we're setting 
forth, the whole q uestion of trade has been integral to these programs, is something that is taking 
increasing place in the work that we are doing.  
29. And finally, of course, there is the question of a better integration between us at the 
institutional level, better cooperatio n between us.  WT/GC/M/79  
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 30. The fact that this is the first time in eight years that I'm here - and maybe the last time that you 
invite me here - but it's at least eight years since I've been invited and maybe that says something. 
That each of us are going in our own di fferent ways and that there really needs to be a recognition at 
our level that we can't go our separate ways. We know we cannot go our separate ways in relation to 
the issue of trade, and it's not just us, it's UNCTAD, it's UNDP, it's ITC, it's OECD, bring ing us all 
together under the leadership of WTO. There's a crucial issue for us in terms of achieving our 
individual objectives, and so the need to increase the relationship between us is apparent. I looked at 
the work that we're doing on Integrated Framew ork in conjunction with the WTO, I took out just the 
volume on Senegal, and as I looked at it, I looked at the action plan - it's not just an action plan on 
trade, it's an action plan which relates to how the economy functions, to the capacity -building, of  the 
physical needs to take advantage of trade opportunities, of the whole question of development, of the 
whole issue of education, of training, even of health, and gets into the questions that we're dealing 
with here. So it is sort of nonsensical that we  haven't had a better approach to the coherence of our 
endeavours until today and we are indeed extraordinarily happy that this new approach that has been 
suggested by your Director General to build on the work of our staffs is something that we are more 
than happy and anxious to be supportive of.  
31. So let me say in conclusion, Mr. Chairman, our mandate from our Board is the issue of 
alleviation of poverty and in the question of alleviation of poverty we have a number of issues, but 
central amongst them is th e question of trade. We cannot deal with that issue without dealing with the 
question of trade, and so we welcome very much the opportunity of exchanging views with you here, 
we look forward to continuing discussions, and I want to say how much I appreciat e the chance of 
coming and being with you to open this new dialogue.  
  WT/GC/M/79  
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 Annex 3  
 
 
Statement by Dr. Supachai Panichpakdi,  
Director -General of the World Trade Organization  
 
 
1. I would like to express my own deep appreciation to my friends and colleagues, Horst  Köhler 
and Jim  Wolfensohn, for being here today, and to say how valuable I believe their presence is at this 
General Council meeting.  They are both untiring in their support for the WTO, the multilateral 
trading system, and the success of the Doha Develo pment Agenda, and it is a pleasure for me, 
personally, to welcome them to the WTO – the first time, I believe, that they have participated 
together in discussions with the entire WTO membership.  
2. We are meeting here today in the context of the mandate we ha ve to increase the contribution 
of the WO to achieving more coherent global economic policymaking.   
3. There can be no doubt, in my view, about how the WTO’s contribution to Coherence can best 
be increased in current circumstances.  The Doha mandate has set for us ambitious objectives to 
increase market access and to strengthen the rules -based trading system.   
4. Our trade negotiations have the potential to unlock substantial new resource flows to 
developing countries, far exceeding those that can be generated through official aid or debt relief.  
Trade growth is key for economic growth and poverty reduction.  We must recognize the obligation 
we have to live up to, not only as trade negotiators but also as representatives of governments that 
have committed thems elves to meet the Millennium Development Goals and other vitally important 
international development initiatives.   
5. Increased market access and a strong, rules -based trading system also has a key role to play in 
enhancing financial stability and generating  sustainable solutions to problems of foreign debt.  
Restricting trade increases the risk of financial crisis and debt problems occurring, and it contributes 
to the length and difficulty of the economic adjustment that is needed when they do.   
6. Advancing t he trade negotiations has become all the more important in the light of slow 
economic growth that is now affecting all regions of the world economy.  A boost to economic 
confidence is urgently needed – a sign that developed and developing country governmen ts alike are 
committed to opening their markets to competition and setting about correcting structural economic 
weaknesses that will raise long -term growth prospects and create the conditions for renewed 
economic prosperity.  
7. The Doha Development Agenda is politically important too – at this difficult juncture, 
governments need to demonstrate a renewed commitment to multilateral solidarity and cooperation 
and to shared responsibility for solving problems of poverty and unemployment, which are so closely 
boun d up with problems of international security.  
8. The breadth of the economic and the political stakes that are tied up with the Doha 
Development Agenda makes it natural, in my view, that we should turn to our sister organizations, the 
IMF and the World Bank, and seek their support in bringing the negotiations to a successful 
conclusion, and, no less important, in helping with the long -term task of implementing the results.  
9. Developing countries are united in wanting trade to play a bigger role in their economi c 
development, but they are saying that they need help to do that, and they need it urgently.  Improved WT/GC/M/79  
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 market access for their exports is a sine qua non .  It needs to be backed up by focused and generous 
support, particularly for the poorest developing co untries.  
10. Developing countries need support to participate effectively in the negotiations, particularly 
to evaluate the implications for their development policies and objectives of negotiating proposals 
made by their major trading partners, and how they m ight make best use of the negotiations to 
advance their own domestic programmes of structural adjustment.  Undertaking difficult economic 
policy reforms in a multilateral context is often easier than pressing ahead unilaterally.  
11. Developing countries need s upport also to plan prudently for the domestic adjustment process 
that their economies will go through as they implement the results of the negotiations.  In this regard, 
reassurance early on of technical and financial assistance to help them manage extern al and financial 
imbalances they encounter in the course of adjusting to trade reform would be particularly valuable, 
particularly in an environment where many of them are already struggling with sluggish world 
growth, debt problems, depressed levels of fo reign capital inflow and weak terms of trade.  Some of 
these areas have already been identified in our work at the WTO – support for adjusting to the fiscal 
effects of reduced tariff revenues, for example, and to the erosion of trade preferences, and in th e case 
of Net Food Importing Countries also adjusting to any temporary increases in their food import bills 
that agricultural trade liberalization may entail.  I am very grateful to the IMF for the valuable 
analytical papers they have prepared for us recen tly.  Further support in policy analysis from the Fund 
and the Bank will be valuable both at the country level and in the context of our work in the WTO.  
12. Developing countries need reassurance also that they will receive new and sustained technical 
and fina ncial support to help them develop the trade -related capacity of their economies, and take full 
advantage of new market access opportunities that will result from the Doha negotiations – from 
improving their customs to upgrading the supply -side of their ec onomies.  I view this long -term 
commitment from the international community as being of particular importance.  
13. The IMF and the World Bank are already doing a great deal in support of the Doha 
Development Agenda.  I have been very encouraged to hear this mo rning from my friends, 
Horst  Köhler and Jim  Wolfensohn, of their commitment to maintain this support, and their 
preparedness to increase it, as circumstances require, in support of an endeavour which they recognize 
as being of importance also to the object ives of their own organizations.      
14. We have heard this morning from both of them also that they view with keen professional 
interest the substance of certain areas of the Doha negotiations in particular, and feel that the IMF and 
the World Bank could mak e important technical contributions in these areas.  Horst  Köhler 
mentioned, for example, the relationship between WTO negotiations on financial services and IMF 
work on financial stability, and Jim  Wolfensohn spoke of the World Bank’s interest in the link  
between how WTO Members craft provisions on special and differential treatment in the Doha 
Development Agenda and the World Bank’s mission on poverty reduction.  I welcome these 
comments, which I see as challenging us to think more broadly than usual abou t our work in the 
WTO, and about the very essence of "Coherence" between trade, finance and development polices 
which is of course the subject of our meeting today.   
15. This, to my mind, raises the important question of what WTO Members believe might be the 
most appropriate institutional vehicle within the WTO for continuing our consultations with the IMF 
and the World Bank on priority areas for collaboration.  When I took up my duties as Director -
General last summer, I was surprised to find that arrangements were not in place for more regular   WT/GC/M/79  
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 contacts between our three organizations where Members and management could be involved in a 
collective endeavour to enhance our cooperation.  I am delighted that it has been possible to arrange 
today’s meeting, and I be lieve that in the WTO we should continue now to give emphasis to this 
aspect of our work.  I look forward to receiving guidance from Members on whether they share my 
view, and if so how they feel we could best arrange to have a more regular process of liai son with the 
IMF and the World Bank under our Coherence mandate and our cooperation agreements.  
 
 
 
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