RESTRICTEDWORLD TRADE
ORGANIZATIONWT/IFSC/M/2
28 August 2001
(01-4126)
Integrated Framework Steering Committee
Second Session
NOTE ON THE MEETING OF  3 MAY 2001
Chair: Ambassador Henrik Reé Iversen (Denmark)
A. ADOPTION OF THE AGENDA
1. The Chairman welcomed all Members of the Steering Committee, in particular, those who
were participating for the first time.  He said that he had extended the invitation to all interested
parties, who could participate in the capacity of Member or Observer, for the reason of full
transparency.  This was in accordance with the decision taken by the WTO Sub-Committee on Least-
Developed Countries.
2. The Steering Committee adopted the proposed agenda as attached in Annex 1.
B. INDICATIONS BY DONORS ON SPECIFIC PLEDGES TO THE IF T RUST FUND
3. The Chairman reported that at the previous meeting of the Steering Committee held on 15
March 2001, nine donors, including UNDP and the World Bank, had made pledges to the IF Trust
Fund, which amounted to approximately US$ 4.55 million.
4. The Representative of Japan said that his country regarded trade as the vital means for
economic development of LDCs, and that it had exte nded technical assistance to them, bilaterally and
multilaterally, in order to enhance their trade-related capacity.  Japan had supported the renewed IF,
which could serve as an effective machinery to help LDCs make full use of opportunities generated
by trade liberalisation  in the multilateral trading sy stem.  In this context, the Government of Japan
was at the stage of finalising its contribution to  the IF Trust Fund.  The contribution would amount to
approximately US$ 500,000, and would be channelled through the already established financial
scheme within UNDP.  It was expected that the contribution would be officially confirmed shortly.
Thereafter, Japan would  formally announce the contribution at the Third United Nations Conferenceon Least-Developed Countries (LDC-III) in Brusse ls.  He added that Japan would continue to
contribute to the objectives of the IF through its bilateral technical assistance to LDCs.
5. The representative of Finland said that his country had always been committed to making the
IF operational.  Finland regarded the establishment of an IF Trust Fund as a constructive step forward.
However, the Trust Fund alone would not be sufficient in assisting the process of mainstreaming tradeinto development strategies.  It was important to coordinate with other already existing trust funds,
such as WTO and ITC Global Trust Funds.  As a result of internal consultation on its contributions to
trade-related technical assistance activities, the Ministry of Foreign Affairs had decided to pledge 1
million Finish Markas to the IF Trust Fund, which would correspond to US$150,000 to US$170,000,
in 2001.  He added that with a fully pledged trust fund, it was time for the IF to move forward withthe implementation of the Pilot Scheme.
6. The representative of Nepal commended the latest development on the revamped IF, after
having seen the slow progress since the Singapore Ministerial Conference in 1996. He welcomed, in
particular, those pledges that had been made by donors at this and previous meetings.  He expressedWT/IFSC/M/2
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appreciation to them, on behalf of all LDCs.  He said that the IF had become an important tool for the
integration of LDCs into the multilateral trading system, and that the Pilot Scheme was the important
first step in the implementation of the IF.
7. The Chairman, on behalf of the Steering Committee, expressed appreciation to the donors for
their contributions to the IF Trust Fund, which now amounted to over US$5 million.  This was an
indication that the IF was moving in the right direction.
C. REPORT OF THE 25TH AND 26TH MEETINGS OF THE INTER -AGENCY WORKING GROUP
8. The Chairman recalled the discussions on the Pilot Phase Work Program at the previous
meeting of the Steering Committee.  At the First Session of the Steering Committee, the Inter-Agency
Working Group (IAWG) had been asked to decide on important issues, including the selection of pilot
countries.  The IAWG had met on 29 March 2001 at the UNDP Headquarters in New York and on 17
April 2001 via video-conferencing.  He invited the Chairman of the IAWG to report on the results ofthe IAWG meetings.
9. The Chairman of the IAWG said that the IAWG had met on 29 March 2001 in New York  on
the margins of the Preparatory Meetings for  LDC-III.  It was an inter-agency meeting, in its expanded
format, which included two representatives each from donors and LDCs.  Donors had been
represented by the United Kingdom and the United States, and LDCs had been represented byTanzania.  Nepal, another LDC representative, could not attend the meeting due to a conflict in its
schedule of meetings.
10. The IAWG had made four main decisions at its 25
th and 26th meetings.  First, Ethiopia had
been included as part of possible candidates for the IF Pilot Scheme, and had been added to paragraph
19 of the revised Pilot Phase Work Program.  Second, the IAWG had reached an understanding on thecriterion for selecting pilot countries, as follows:  (i) demonstration of a strong commitment by the
government to integrate trade into its national development strategy and its PRSP; (ii) the status of
national preparation of the PRSP; (iii) the preparatory stage and timing of an upcoming World Bank
Consultative Group or UNDP Round Table meeting; and, (iv) conducive operational country
environment (e.g. level of infrastructure, resource base of the World Bank/IMF and UNDP countryoffices, donor response, and the pace of domestic reform).
11. Third, the IAWG had requested the World Bank  to identify candidate LDCs for the Pilot
Phase, and provide a technical report on them,  which would enable the IAWG to take a decision on
the first three pilot countries.  Based on the Bank's report, the IAWG at its 26
th meeting had decided
on three pilot countries namely, Cambodia, Madagascar and Mauritania.  Fourth, the IAWG reviewed
the five countries which had held IF Round Table (i.e. Bangladesh, The Gambia, Haiti, Tanzania and
Uganda).  Following the review, it recommended that the Chairman of the IF Steering Committeeshould write a letter to the five countries, communicating the decision taken by the Steering
Committee at its first meeting.  The letter had been signed by the Chairman and had been sent out to
the five countries.
12. Lastly, the Chairman of the IAWG welcomed the memorandum from the Spring Meeting of
the World Bank and the IMF, which explicitly supported  the revitalization of the IF, re-affirmedtrade, as one of the core strategic priorities for the institution.
13. The Steering Committee took note of the statement by the Chairman of the IAWG.
D. REVISED PILOT PHASE WORK PROGRAM
14. The Chairman said that the Pilot Phase Wo rk Program was the operational basis for the
implementation of the IF Pilot Scheme.  He recalled that, at the previous meeting, Members of theWT/IFSC/M/2
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Steering Committee had expressed general satisfaction with the Work Program, presented by the
World Bank, on behalf of the six core agencies, while making several comments and suggestions for
its improvement.  The latest revision of the Work Program had incorporated these comments and
suggestions.
15. The representative of Canada said that her country endorsed the Work Program, but had some
general comments and suggestions.  First, it rema ined important to ensure that the IF exercise
reconciled the views of Geneva and Washington on trade liberalisation.  In this context, the
implementation of key WTO Agreements and compa tibility of trade-related capacity building with
WTO rules was an important part of the process of trade integration, and had to be incorporated into
IF analytical documents and IF programming.  IF analyses should be built on assessments already
undertaken by the WTO, such as in the Trade Policy Review Mechanism (TPRM) and accession
negotiations, and the programmes which resulted from such analysis.  Such analyses should alsoreflect the attempt to synthesise WTO agreements with IF experience in developing programming.
Second, implementation of the Pilot Programme needed to take account of the fact that the IF had
been  designed to co-ordinate donor-led capacity building at the country level.  Canada would like to
see greater emphasis in the outline document on a process by which all of the six agencies and
bilateral donors could be engaged in planning and implementation at the country level.  Third, the IFwas  designed to be participatory.  In this regard, Canada would like to underscore that the
implementation of the Pilot Scheme should endeavour to ensue that the process was fully
participatory.
16. The representative of the World Bank, in response to the comments by Canada, said that, first,
it was difficult to reflect all necessary elements in the Work Program, which only provided an overall
framework for the trade integration studies.  Flexibility would be required in the terms of reference for
each of the pilot countries, which would reflect country specificities.  The availability of existing
information on the countries, such as from WTO Trade Policy Reviews (TPRs), could also influence
the terms for the trade integration studies.  The purpose of the trade integration studies was to build on
existing information, but not to re-invent  the work of others.  Second, the World Bank was in supportof the involvement of donors at the country level, which would be sought actively in the pilot phase
and should be clearly indicated in the Work Program.  Third, the trade integration studies could also
assess the impact of regional integration agreements, which was not fully reflected in the Work
Program.  Nonetheless, such assessment would be incorporated, as appropriate, in the studies.
17. The Chairman said that the Pilot Phase Work Program was an evolving document, which
would be reviewed at the end of the pilot phase.  He said that the Steering Committee had taken note
of the concerns by Canada, which would be taken into account by the review.  He proposed that theSteering Committee adopt the Pilot Phase Work Program.
18. It was so agreed.
E. PRESENTATION BY THE WORLD BANK: (I) T HREE LDC S SELECTED BY THE IAWG; AND, (II)
INDICATORS FOR ASSESSING AND MONITORING PROGRESS DURING THE PILOT PHASE
1. Three LDCs selected by the IAWG
19. The representative of the World Bank, reporting on the recent developments at the World
Bank.  He informed the Steering Committee that the paper "Leveraging Trade for Development" had
been submitted to the Executive Board.  The paper la id out a strategy for the Bank's operation in the
area of trade, which had become one of the priority strategic areas for the World Bank.  There were
three levels of activities envisaged in the paper: first, at the global and multilateral level, where the
focus would be placed on specific issues relating to development; second, at the regional level where
greater attention would be paid to regional integration agreements and their impact on economic
growth and development; and, third, at the national level where the focus would be given to an IF-WT/IFSC/M/2
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type approach, i.e. use of trade as a vehicle to promote economic growth and development.  The paper
was complemented by the research agenda on market access issues, including the identification of
remaining areas of protection in OECD countries and developing countries from the development
point of view.
20. He said that the Bank's Country Departments had expressed much interest in trade-related
work, including within the context of the IF.  There was also a concerted effort to support the IF
process within the World Bank, as resources had been mobilised internally to support the IF.  In
particular, there was a strong interest in trade-related work in the Africa region.
21. Regarding the selection of countries under the IF Pilot Scheme, the representative of the
World Bank said that the IAWG had met in March 2001 to identify the first set of pilot countries and
to clarify the criteria for the selection.  In the course of discussions, six countries had been identified
as potentially strong candidates for the pilots, based on current activities on trade by bilateral andmultilateral agencies in those countries.  In order to assess these six countries for the selection of the
initial three pilots, three criteria had been used.  The first criteria was whether the Government
demonstrated strong commitment to use trade as vehicle for development and to incorporate a trade
strategy into its national development plan, such as the PRSP.  The second criteria was whether there
were a PRSP process and associated Consulta tive Group (CG) meeting which would be held
following the completion of the PRSP.  The timi ng of the PRSP and CG meeting was of crucial
importance as one of the objectives of IF's trade integration studies, which would be incorporated in
PRSPs, was to generate financing for trade-related projects at CG or UNDP Round Table meetings.
The third criteria was the likelihood of success as a pilot, because the completion of the Pilot Scheme
was constrained by the tight deadline of November 2001.  It was important to select countries wherethe existing  environment, including institutional capacity and the pace of domestic reform, were
conducive and amenable.
22. In assessing which countries met the above criteria, the World Bank had held a series of
meetings with its Country Teams, as well as with the UNDP which operated in these countries.  The
technical information used in the assessment of the six countries was summarised in the document
entitled "Selection of the Initial Three Pilot Coun tries under the Integrated Framework Pilot Scheme".
The six countries were among the 15 potential candidate countries listed in the Pilot Phase Work
Program.  It was important to note that information contained in the document was constantly
changing, and needed to be updated, in particular for the other countries beyond the six that had been
identified.
23. The IAWG at its 26
th meeting had agreed to the selection of three pilot countries - Cambodia,
Madagascar and Mauritania.  In all of the three countries, there was strong ownership by theGovernments, a strong demand for integrating trade into their PRSPs, and strong support from the
respective Country Departments at the IMF, the World Bank and UNDP for the IF process.  As a
result, there was a high probability for the completion of the pilot process by November 2001.  The
three countries were also in the process of drafting their PRSPs, into which the results of the Trade
Integration Studies would be fed.  In the case of Mauritania, the full PRSP had already beencompleted, but would be updated by the end of year 2001, and a Consultative Group meeting  had
also been scheduled.  The three selected countries had also been active under the old IF.  In the case
of Cambodia, for example, a consultant, financed by one the core agencies, was already involved in
the IF process, and a PRSP Workshop had al ready been held in the previous week.
24. The other three countries described in the document (i.e. Mali, Mozambique and Nepal) could
be considered for potential candidates in the next round of trade integration studies.  There was strong
interest among the agencies, particularly, at the World Bank, to pursue trade integration work.  In
addition to the three, in the Bank's recent consultations, Ethiopia and Eritrea had also emerged as
strong candidates for trade integration studies on the parts of the Country Teams and the
Governments.  Uganda and Tanzania, two of the five countries which had held Round Tables underWT/IFSC/M/2
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the old IF, had also been identified as countries that indicated much interest.  The increasing interest
in the trade integration work would make the success of the initial three pilots even more important
for their experience to be learned for other upcoming studies under the IF.  He reiterated the
significance of the successful completion of the three pilots by the deadline of the WTO Fourth
Ministerial Conference.
2. Indicators for Assessing and Monitoring Progress during the Pilot Phase
25. The representative of the World Bank also made a presentation on the second sub-item under
Agenda D, commenting on the document "Monitoring Progress under the IF Pilot Scheme".  He
suggested benchmarks which could be used for monitoring and evaluating progress in the
implementation of the Pilot Scheme.  These were as follows:
(a) Creation of the IF Trust Fund and transfer of resources committed by donors;
(b) Agreement on selection of pilot countries;
(c) Compilation of available materials and prior analyses undertaken for the three pilot
countries by the IAWG;
(d) Identification of priorities and required expertise to undertake the integration
diagnostics and develop sectoral action plans;
(e) Completion of terms of reference for the IF team;
(f) Identification of national counterpart teams working on or in parallel to the PRSP by
the government;
(g) Identification of consultants, including identification of local experts and private
sector representatives;
(h) Engagement of the local donor community by Bank/UNDP representative and
country teams;
(i) Contracts issued by executing agency;
(j) Completion of the first mission, including a consultation workshop;
(k) Draft report on strategy completed and circulated for comment to the IAWG and
counterpart PRSP team;
(l) Draft report revised;
(m) Second consultation mission/workshop to discuss draft strategy;
(n) Development of sectoral action plans that respond to priorities identified by the team;
(o) Submission of project proposals to the CG or other forums; and,
(p) Funding by donors of priority projects.
26. Concerning indicator (c) "compilation of available materials and prior analyses undertaken for
the three pilot countries by the IAWG", the representative said that TPRs, work by the IMF, UNDP,World Bank and other agencies, as well as Needs Assessments, would be compiled to assess the
situation regarding trade policy and trade-related in tegration for each of the countries.  RegardingWT/IFSC/M/2
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indicator (e) "completion of terms of reference for the IF team", the terms of reference would be
modified in accordance with each country's priori ties and pre-existing information in the trade area.
On indicator (f) "identification of national counterpart teams working on or in parallel to the PRSP by
the government", the objective was that IF term w ould work together with the national counterpart
teams.  The purpose on indicator (g) "identification of consultants, including local experts and privatesector representative" was to ensure access to fresh information on priorities and challenges for each
pilot country.  Indicator (h): "engagement of the local donor community by Bank/UNDP
representative and country teams", was designed to engage donors at the early stage of the IF process,
so as to generate  donor interest in financing trade-related projects at CG meetings.  Indicator (j)
"completion of the first mission, including a consultation workshop", was to ensure that the process
was fully participatory, thereby, where initial findings  in the trade integration study would discussed
and the country's priorities could be identified.  Other indicators were essentially self-explanatory.
27. The representative of the World Bank added that the incorporation of a trade integration
strategy into the PRSP was not indicated in the document as an indicator, since the PRSP was a
country-owned document.  Nonetheless, he was conf ident that the strategy would be incorporated in
the PRSPs of the pilot countries.  Moreover, he said  that the World Bank would report to the Steering
Committee at its next meeting on the progress made in the implementation of the Pilot Scheme.
28. The representative of the United States said that her country looked forward to seeing
individual work programs for the three countries, and stressed the importance of making the pilot
cases a success for the IF.
29. The representative of Norway associated his delegation with the comments made by Canada.
He stressed the importance of building on existing information for the trade integration studies, and of
co-ordination at the country level.  Norway expres sed support for the criteria for selecting the pilot
countries, particularly, the pilots with a likelihood of  success.  Norway also looked forward to the
identification of the second wave of countries for trade integration studies.
30. The representative of Canada expressed support for the selection of pilot countries, as well as
for the selection process.  Concerning the indica tors for monitoring progress, she said that the
incorporation of a trade chapter into the PRSP should be part of monitoring progress under the Pilot
Scheme.  Moreover, the indication of funding for Action Plans at CG meetings should also be
monitored as part of the pilot process.
31. The representative of Switzerland, agreeing with the comments by Canada and Norway,
reiterated the importance of donor-agency co-ordination at the country level.  She also underlined the
importance of integrating beneficiary governments in the IF process, which was the only way to
ensure long-lasting impact at the country level.
32. The representative of Japan said that his country supported the selection of the three countries
for the Pilot Scheme.  Japan was interested in ac tive involvement in Cambodia, whose reconstruction
it had been actively assisting.  With regard to the identification of the second wave of countries for the
IF, he stressed the importance of taking into full account the experience which would be obtained
from the first three pilot countries, as stipulated in paragraph 19 of the Pilot Phase Work Program.
33. The representative of the European Communities expressed support for the selection of the
pilot countries and the process involved, as well as the future process as indicated by the World Bank.
With regard to the indicators for monitoring progress, it was important to link the IF to the PRSP
process, while fully recognising the country owners hip of the PRSP document.  He recalled that one
of the pre-conditions for the selection of pilot countries was the full commitment by the governmentto integrate a trade chapter into its PRSP, and said  therefore that such reference should be included as
part of the indicators for monitoring progress under the Pilot Scheme.  Moreover, a reference to the
bilateral donor community could also be made as part of the monitoring indicators.WT/IFSC/M/2
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34. The representative of Zambia said that since his country had been active in the process, he
had thought that it would have been among the six candidates under the IF Pilot Scheme.
Nonetheless, he understood that the selection process had taken into account activities there not
limited to Geneva.  He supported the selection of the three countries.  Zambia would like to know
how the next round of countries would be selected, an d would like to make sure that it would be part
of it.
35. The representative of Mauritania expressed satisfaction that the IF was entering into an
operational phase, with the establishment of the IF Trust Fund, and that the IF was becoming an
instrument to assist LDCs' integration into the multilateral trading system.  His country was also
pleased that it had been selected as one of the three pilot countries, which he believed was due to its
continued economic reform efforts, with the support from the IMF and the World Bank in the PRSP
framework.
36. Under the PRSP framework, the four goals of th e Governments were: (i) to reduce all types of
poverty, improve the economy, and to reduce the dependence on external factors; (ii) to increase
productivity; (iii) to develop human resources; and, (iv) to develop good governance through full
participation of all actors.  The PRSP would be implemented gradually over the next 15 years.  In this
process, the Government would enrich itself with experience gained on poverty-reductionprogrammes, the national economy, and the evaluation of the programme.  The first phase of the
implementation in 2001-2004 had set an ambitious target for poverty reduction, which would mobilise
all actors in the process.  It was expected that the role of the Government would be reduced in the
economy to selected areas, such as the provision of basic services in health and education, as well as
the creation of a favorable environment to attract foreign investment.  The Government would alsofocus on distributing resources efficiently in the fight against poverty.  The role of the private sector
needed to be strengthened in various sectors, pa rticularly in the trade sector, through measures to
attract foreign investment.  Private sector reform would focus on the reform in the legal framework
and the tax system, as well as the improvement of the competitive environment.  In addition, civil
society would play a crucial role in the fight against poverty.  Since the problem of poverty was veryoften that of proximity, NGOs operating in the field were in a better position to address the problem.
The representative of Mauritania stated that his selection as one of the three pilot countries would help
consolidate the process of the fight against poverty.
37. Finally, he informed the Steering Committee that Mauritania was no longer a member of the
UEMOA customs union.  To that end, a correction needed to be made to his countrys' membership in
the Organization in the document "Selection of the Initial Three Pilot Countries under the Integrated
Framework Pilot Scheme".
38. The representative of the World Bank, in response to the comments by Canada and the EC,
said that the integration of trade dimension into PRSPs could be included as part of the indicators for
assessing and monitoring progress during the pilot phase.  Regarding the comment by Zambia on the
selection of three pilot countries, he said that the IF process was only one of the criterion, on the basis
of which countries had been selected under the IF Pilot Scheme.  It was also important for thegovernment to consult with Country Directors of the World Bank, IMF and UNDP to confirm that
trade ranked high in their assistance priorities for the country.  One of the problems in the past had
been that trade had not been identified as one of th e priority areas of assistance.  Currently, there was
much more interest in the issues of trade and trade integration, particularly, among the Bank's Country
Departments, in particular, in the Africa region.  He was, therefore, confident that more assistancewould be provided in this area for the coming y ears.  Concerning the description of Mauritania's
Membership in the UEMOA, he fully noted the factual mistake which would be corrected in the next
revision.
39. The Chairman noted that it was evident that the Steering Committee fully supported the
choice of countries for the IF Pilot Scheme recommended by the IAWG.  Regarding the indicators forWT/IFSC/M/2
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assessing and monitoring progress during the pilot phase, he said that the Steering Committee had
agreed to the list which had been submitted by th e World Bank, on behalf of the six agencies, as well
as the inclusion of an additional indicator, that was, whether trade would be incorporated in PRSPs.
Donors needed also to be consulted on the Action Plans in the discussions at the Trade Integration
Workshops.  Moreover, the Steering Committee had noted the need to take into consideration theexperience from the first three pilot studies before moving on to the selection of the next wave of
countries for trade integration studies.
40. The Chairman proposed that Steering Committee takes note of the comments made.
41. It was so agreed.
F. FIVE IF R OUND TABLE COUNTRIES
42. The Chairman recalled that the Steering Committee, at its previous meeting, had agreed that
trade-related technical assistance and capacity-building projects, which had been presented to the IF
Round Tables under the old IF in Bangladesh, The Gambia, Haiti, Tanzania and Uganda, would be
considered for funding from the IF Trust Fund, once these projects were prioritised and sequenced,
and were in support of mainstreaming.  The Steering Committee had also reached an understanding
that projects to be financed would not exceed the ceiling of US$ 300,000 per each of the five LDCs.
In his capacity as Chairman, he had written a letter to the five LDCs to communicate the decision andthe understanding of the Committee.
43. The Chairman of the IAWG, referring to paragraph 3(d) of the adopted Pilot Phase Work
Program, said that the Steering Committee had mandated the IAWG to consult with the five LDCs to
identify their priorities, to consider trade-related technical assistance projects that had emerged from
the IF Round Tables, and to make selection on the basis of their priorities that could be presented tothe Steering Committee for funding from the IF Trust Fund, and which not exceed the value of US$
300,000.  Moreover, those projects falling outside of the "mainstreaming" objective could also be
separately presented to the CG or UNDP Round Table meetings for funding.
44. He said that ITC had begun consultations with the five LDCs on behalf of the agencies.  ITC
was consulting on the basis of the letter of the Steering Committee Chairman to the IF focal points inthese countries.  At the same time, the World Bank  was relating with these countries as part of its
overall responsibility for the Pilot Phase Work Program, to make sure that the process was pursued
within a coherent policy framework of PRSP and IF 's mainstreaming agenda.  While the consultations
by the ITC and World Bank continued, the agencies were already pursuing some of the projects that
had emerged from the five IF Round Tables.  For instance, the WTO had initiated, from its own
resources, the Trade Policy Review for Haiti, which had been identified as one of the priority projects
in support of mainstreaming by the government.  He  said that the agencies would provide the Steering
Committee an updated report on this matter at its next meeting.
45. The representative of Canada expressed support for the follow-up activities to the IF Round
Tables, as initiated by the ITC on the identification of those prioritised projects.  Canada would like to
see the list of prioritised projects, some of which could also be transmitted to its capital for
consideration.
46. The representative of Lesotho asked what wa s the minimum preparatory work required for a
country to hold an IF Round Table.
47. The representative of the United States expressed satisfaction with the ITC's consultations
with the five Round Table countries on identificatio n and prioritisation of trade-related technical
assistance projects in support of mainstreaming, a nd looked forward to obtaining the results of the
consultations at the next meeting.WT/IFSC/M/2
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48. The representative of the European Communities said that paragraph 3(d) of the Pilot Phase
Work Program indicated that trade-related technical assistance projects would be presented to the IF
Steering Committee at its second meeting, and that the deadline was missed.  It was hoped that the
IAWG would be able to report back to the Steering Committee at the next meeting.
49. The representative of the ITC said that it had initiated consultations with the five LDCs soon
after the first meeting of the Steering Committee, and that it had so far obtained the preliminary
indication of their priorities.  The letter conveying the official communication from the Chairman
would facilitate the on-going consultation process with the five countries.  The ITC would continue to
consult, with a view to identifying practical activities which would enhance and lead to
mainstreaming in the countries.
50. The representative of Uganda confirmed that the Chairman's letter had been transmitted to his
capital for consideration and action, said that his country would provide its response as soon as
possible.  He was grateful that those trade-related projects from the IF Round Tables would be
accommodated under the IF Pilot Scheme.
51. The representative of Zambia sought assurance from the donors that financing would be
available for those projects which would be identified as priorities for the five countries.
52. The Chairman of the IAWG, in response to the question by Lesotho, said that Round Tables
held under the old IF had not been successful in raising necessary funding for trade-related technical
assistance projects, because they had been stand-alone and organised outside development
frameworks such as th e UNDAF and PRSPs, Round Tables and Consultative Groups.  Under the
revamped IF, Action Plans and priorities stemming from World Bank-led trade integration studies,
would be presented to CG or UNDP Round Table meet ings.  Therefore, those IF Round Tables would
now be folded into CG and UNDP Round Table, wh ere trade would be discussed along with other
development priorities.  As for the minimum prepar atory work for the CG or Round Table meetings, a
country needed to go through, first, a trade integration strategy which would be led by the World
Bank, and then, development of an Action Plan which would contain prioritised trade-related
technical assistance projects to be presented for consideration by donors.
53. The Chairman of the IAWG, in response to the question by Zambia, recalled that the Steering
Committee had reached the understanding that the value of trade-related projects in support of
mainstreaming at US$300,000, could be met for each of the five Round Table countries from the IF
Trust Fund.
54. The Chairman requested the IAWG to continue its consultations with the five Round Table
countries and to report back to the Steering Committee at its next meeting with a prioritised list of
projects for possible financing from the IF Trust Fund.
55. It was so decided.
G. STATEMENT BY UNDP ON THE ISSUE OF OVERHEAD CHARGES ON THE IF T RUST FUND
56. The Chairman recalled that the Steering Committee at its previous meeting had an exchange
of views on the issue of management fees and overhead charges for executing projects under the IF
Trust Fund, and that UNDP had been consulting with the other agencies and donors in this regard.
57. The representative of UNDP said that the IF Trust Fund had been established by UNDP, on
behalf of the six agencies.  The establishment of the IF Trust Fund, followed the rules of UNDP,
including decisions by the Governing Board of UNDP on the reimbursement of overheads cost, as
well as specific agreements that had been signed by UNDP with some donor countries.  After
consultations with the other agencies, it had been agreed that the overall overhead costs would notWT/IFSC/M/2
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exceed 13% in any circumstance.  Accordingly, this would be reflected in the draft terms of reference
governing the IF Trust Fund.  He urged those donors who had pledged to remit their contributions to
the IF Trust Fund as quickly as possible, so as to allow the agencies to proceed with implementation
of the IF Pilot Scheme in the three pilot and five Round Table countries.  The cost of implementation
in these countries would immediately require US $2.4 million.  UNDP would sign the first MOU with
the United Kingdom in the following week with regard  to the transfer of its contribution.
58. The representative of the Netherlands welcomed the proposal by UNDP to cap the overall
overheads cost at 13%.  The Netherlands had been concerned about the overheads, in particular, the
3% management fee that had been proposed by UNDP .  However, after consulting with other donors,
it had been felt that a positive decision regarding the modalities for the IF Trust Fund was needed to
allow the IF process to move forward.  In this sp irit, he proposed the following modalities for the IF
Trust Fund.  First, the donors would be willing to accept the overhead cost at 13%, which was thestandard in the UN system.  Second, the 13% should cover all administrative costs relating to the
execution of the program, while the remaining 87% would be exclusively used to cover program
expenses.  Third, the agencies would decide among themselves how to distribute the 13% overhead
costs.  No reference would be made to the 3% management fee or to the execution fee in the terms of
reference for the IF Trust Fund, while only the maximum 13% overheads cost would be mentioned.Fourth, there would be no derogation from any existing bilateral funding agreements between UNDP
and bilateral donors concerned.  Finally, the draft terms of reference for the IF Trust Fund would be
adjusted accordingly, taking into account the these points.
59. The representative of the United Kingdom, recalling that the IF Pilot Scheme faced a tight
timeframe for the review before November 2001, stressed that it was important to ensure the
availability of funds to allow the agencies to undertake the work as required in the Pilot Scheme.  She
encouraged other donors to remit their contributions as quickly as possible, as had been done by her
country.
60. The representative of UNDP confirmed that 13% would be the maximum to be charged for
the overhead costs of the IF Trust Fund, which would be distributed among the agencies.  No mention
would be made of the management fee in the Terms of Reference.  He added that the World Bank and
UNDP would not charge 13% in any case.
61. The Chairman proposed that the Steering Committee agree that the fee for the IF Trust Fund
should not exceed the rate of 13%, which would cover all administrative costs and would be
distributed among the agencies, and that this arrangement would be reviewed at the time of the
evaluation of the IF Pilot Scheme.
62. It was so agreed.
63. The Chairman noted that paragraph 10 of the draft terms of reference for the IF Trust Fund
would accordingly be revised to reflect the agreement.
H. COORDINATION OF TRADE -RELATED TECHNICAL ASSISTANCE : P RESENTATION BY
DAC/OECD S ECRETARIAT
64. The Chairman said that the coordination of trade-related technical assistance was one of the
central  objectives of the IF.  The Development Assistance Committee (DAC) at the OECD, strongly
supported the IF, as reflected in its active participation in the IF Steering Committee and at IAWG
meetings.  The DAC  had developed guidelines/disciplines for the effective coordination and delivery
of technical assistance in the area of trade-related capacity building, which had been endorsed at the
High Level Meeting in the previous week.WT/IFSC/M/2
Page 11
65. The representative of the DAC said that the OECD and its Members fully recognised the
importance of and mutual benefits from integrating developing countries into the global economy.
She emphasised the need to effectively address the concerns of developing countries in the new round
of trade negotiations.  The DAC was now working more closely than ever before with the Trade
Committee at the OECD.  Their mutual effort was to endeavour to bring the trade and developmentcommunities together, both at the Secretariat and the Committee level, and to work towards a more
coherent approach in responding to the need of developing countries.  In this context, the DAC
welcomed the participation of the WTO Director-General at the first brainstorming meeting between
the representatives of the Trade Committee and DAC on 24 April 2001.
66. The DAC had asked its Secretariat to review capacity constraints that developing countries
faced in the area of trade, including how to assist them in overcoming those constraints.  The DAC
guidelines were intended not to be prescriptive, but to provide a common reference point, a basis foron-going dialogue among policy communities, and among key stakeholders. Developing countries,
the IF core agencies, and bilateral agencies had been consulted in the preparation of the guidelines.
The guidelines had also built on the core lessons learned from the IF, JITAP and other bilateral
activities that contributed to capacity building for trade.
67. The DAC guidelines contained three key principles.  The first principle was to "adopt
comprehensive approaches".  Experience with development cooperation had shown that ad hoc  and
isolated approaches to trade-related technical assistance would not be successful.  Trade capacity
building needed to address constraints at all levels in a comprehensive manner, including the macro
and trade policy environment, supply side constraints, implementation of WTO rules and agreements,
trade facilitation and market access.  This was al so the reason for the importance of mainstreaming
trade as one element in a wider comprehensive national strategy for development.
68. The second principle in the DAC guidelines was to "support local ownership and
participation", which was the essence of capacity building.  Technical co-operation in the past had too
frequently involved sending expatriate experts to a country for a short period of time, often leaving
little expertise and little capacity behind.  Now, there was an increasing trend in capacity building, inwhich all relevant stakeholders, including the policy-making community, with the private sector and
civil society, worked together on the ground and engaged in consultations, networking and more
interactions.  A participatory approach to trade policy-making would help strengthen local capacities,
as stakeholders would “learn-by-doing” and learn from each other.
69. The third principle was to "improve co-ordination and information-sharing among donors,
both at the level of headquarters and on the ground."  The challenges for developing countries were
enormous and beyond the means of any single donor to respond effectively.  In order to succeed inhelping developing countries to assume greater ownership of their trade development process and to
sustain that process, and in order for the IF and the mainstreaming process to succeed, the donor
community had to work more closely together on the ground in the beneficiary countries.  Better co-
ordination between the various bilateral and multilateral activities, and a workable division of labour
would prevent duplication, optimize resource use, and avoid overloading partner country capacities.To achieve these objectives, several conditions were necessary.  First, the donor community needed to
rally behind efforts led by the World Bank and IMF to mainstream trade into comprehensive
development strategies using PRSPs as the principal vehicle.  The existence of multiple frameworks
of development  cause confusion and ultimately a lack of coherence.  Second, it required fuller and
better co-ordinated involvement of bilateral a nd other multilateral agencies in the PRSP process.
Although the responsibility for co-ordinating the preparation of PRSPs lay ultimately with the
developing country itself, all parties involved, including the Bank and the Fund, needed to contribute
to this objective in a constructive and transparent manner, including  through information sharing..
Third, there should be frequent consultations as draft PRSPs evolved.  Bilateral and other multilateral
agencies, civil society and the UN system should be engaged from the beginning.  Fourth, bilateraldonors also needed to be more proactive in the process.  The process did not only depend on theWT/IFSC/M/2
Page 12
World Bank and IMF.  Fifth, there should be better communication and co-ordination between
headquarters and field offices. There was a need to foster commitment among country level aid
managers for trade development and provide them w ith sufficient institutional support to undertake
trade capacity building activities in terms of greater resources, incentives and knowledge of trade
issues.  Furthermore, there was also a need for better communications flow between Geneva andWashington.
70. The representative of Zambia said that allocation of resources should not disadvantage any of
the six agencies in the IF process, as they we re complementary in their role and competence.
Moreover, he said that inadequate coordination had been one of the drawbacks of the old IF, and that
cooperation between the agencies and donors should be improved in the revamped IF for the benefits
of LDCs.
71. The representative of Uganda expressed appreciation for OECD's initiative to hold regional
seminars on trade-related issues, including one to be held in Santiago, and expressed the hope that the
organisation would organise  a seminar that would target the LDCs.  With regard to coordination, it
was important for Country Representatives of the World Bank and the UNDP to recognize the
importance of trade to be mainstreamed into PRSPs  and implement it operationally in the beneficiary
country. Little emphasis on trade by the two institutions had been one of the difficulties faced byLDCs in their past attempt to mainstream trade at the country level.
72. The Chairman proposed that the Steering Committee should take note of the comments made,
and suggested that the matter should be kept under review.
73. It was so agreed.
I. COMPLEMENTARY ACTIVITIES : ZAMBIA TRADE SECTOR STAKEHOLDERS ' MEETING , LUSAKA ,
11 A PRIL 2001
74. The Chairman said that some Members at the first meeting of the Steering Committee had
stressed the importance of coordination to encompass complementary activities at the country level
within the framework of the IF.   One example of such activities had taken place in Zambia, where a
Stakeholders' meeting on trade had been held and attended by donors and some of the IF agencies,including the WTO.
75. The representative of the WTO said that the Stakeholders' meeting held on 11 April 2001 had
been attended by about 50 participants, including from the Government, the private sector, and the
donor community.  The purpose of the meeting had been to discuss the "Common Vision on Trade",
which had been outlined in the report prepared for the meeting with the support of USAID.  The
vision, which envisaged tripling the trade volume by the end of this decade, had provided a good
opportunity for dialogue, especially between the priv ate sector and Government officials.  Regarding
the way forward for the IF process in Zambia, there had been a number of presentations, including
one from Zambia's PRSP Coordinator on the status of the preparation of its PRSP, which was due to
be completed by September 2001.  It had been agreed that trade would be addressed in the PRSP as a
cross-cutting theme, and that the exercise would be led and coordinated by the Ministry of Commerce.
The date for the next CG meeting would be held after the scheduled election in November 2001, andperhaps earlier next year.  Finally, he added that the Ministry of Commerce had fully participated in
the meeting, with the support of bilateral donors, including USAID.
76. The representative of Zambia said that he would provide his Government's point of view on
the meeting.  The Ministry, responsible for trade and the IF, had sponsored, together with the USAID,
an IF Stakeholders Meeting in Lusaka on 11 April 2001.  Fifty-five representatives from theGovernment, the private sector, and the donor commun ity had participated in the meeting.  Overall,
the meeting, chaired by the Permanent Secretary of the Ministry of Trade, had been successful inWT/IFSC/M/2
Page 13
achieving the goal of mainstreaming trade and addressing policy and implementation issues in the
area of trade.  The meeting included a number of presentations, including the presentation by Mr. Jim
Fox, USAID Consultant on the IF, as well as by Za mbia's PRSP Coordinator on the preparations of its
PRSP which was due to be completed in the summer 2001.
77. The participants had expressed the view that  export was crucial for economic growth and
poverty reduction.  USAID Consultant Dr. van Blarcom, together with one officer from the Ministry
of Trade, had provided a background to the IF in Zambia, including the analytical work that had been
done.  USAID Consultant Mr. Fox had presented the vision for export, as outlined in the report
financed by USAID, which projected tripling Zambia's exports by year 2010.  It was expected that
this vision (strategy) would help restore rapid economic growth, reduce the size of  Zambia's debt
burden to  a manageable level, and also reduce poverty.  At the same time, the report had identified
constraints  impeding the achievement of the vision.
78. The Permanent Secretary had fully endorsed the vision for export; and had expressed the
Government's commitment to implement the vision.  He proposed chairing the Export Promotion
Steering Committee, if such committee was considered useful by other stakeholders.  He observed
that the report's description on the Government's commitments to the privatisation and export
promotion had been rather pessimistic.  He cited the Government's activities for enhancing tradeactivities, such as the inclusion of services in the Export Board's promotion activities and
reassessment of the locations and duties of trade attachés.
79. There had been strong support for the export vision among the participants.  USAID
consultants had provided an overview of the issues concerning the implementation of the IF and
mainstreaming trade into the development agenda of the country.  In response, the private sector hadcalled for a stronger leadership by the Government on trade issues, and had also called for  improved
communication/coordination among key Ministries, and for closer cooperation with the private sector.
The idea of a public-private steering committee had been fully endorsed.  Moreover, some speakers
had requested that the Ministry name a senior person to oversee the dialogue with the private sector,
and with other key Ministries on a full time basis.  Donors had been requested to fund such position, ifan appropriate incumbent could be found.  The public-private steering committee would include
representatives from the main private sector associations, economic ministries and statutory bodies,
and donors.  The purpose of the steering committee was to strengthen the public sector-private sector-
donor collaboration in order to  achieve Zambia's export potential.  The steering committee would
also review the current PRSP draft section on macroeconomic growth, agriculture, industry, tourism,
and mining, in order to ensure that trade issues were assigned a proper weight.  The participants had
been requested to provide comments on the draft PRSP to the steering committee which would then
meet with the PRSP Coordinator on 7 May 2001 to discuss the issues raised.
80. Finally, the Government, the private sector, and donors had been satisfied with the outcome
of the meeting, namely, establishing consensus on the importance of mainstreaming trade into the
PRSP, and improving cooperation between the Government and the private sector to work together
for the implementation of the vision for export.
81. The representative of the United States said that on complementary activities, the adopted
Proposal for the IF Pilot Scheme encouraged donors to identify LDCs which had strong field presence
and an existing program of trade-related technical assistance, and  were committed to the integration
of trade into overall development strategies.  The US was in the process of identifying the countries
for complementary activities, and looked forward to working closely with the IF agencies, otherdonors, and LDCs in these complementary activities.
82. The representative of the United Kingdom, echoing the comments by the DAC, Canada,
Norway and Japan, reiterated the need for improved collaboration between bilateral and multilateral
agencies.  While donors would continue to work with partner countries, it was also important toWT/IFSC/M/2
Page 14
improve donor coordination, including between bilateral and multilateral donors, in the spirit of the
IF.
83. The representative of Canada endorsed the comment by the UK.  She suggested that the ITC
compiles a list of on-going trade-related activities by various donors in the five countries which had
held Round Tables under the old IF.  Such a compilation should also be made for the three pilotcountries, where trade integration studies would be undertaken by the World Bank.
84. The Chairman said that the Steering Committee fully recognised the need for better
coordination among donors, both at the level of the Steering Committee and at the country level, as
well as the importance of balance between the two levels of coordination.  He suggested that the
Steering Committee take note of these comments.
85. It was is so agreed.
J. ANY OTHER BUSINESS
86. The Chairman of the IAWG, on behalf of the six agencies, expressed their gratitude to LDCs
for their support in the consultation process on various issues.  He also expressed appreciation to the
donor countries for their contributions to the IF Trust Fund, which had  made  the IF operational and
transformed it into a funded mandate.  He added that the core agencies valued the format of the
Steering Committee, where the equality of participation among donors, LDCs and the agencies hadbeen attained.
87. The Chairman said that, the IF was one of th e interesting deliverables for the forthcoming
Third UN Conference on LDCs, which had been developed in cooperation among donors, LDCs, and
agencies.  He congratulated the Steering Committee for its efforts to make the IF operational and
effective.  He added that the Chairman of the WTO Sub-Committee on Least-Developed Countriesand the Director-General would report on the progress of the IF at the forthcoming meeting of the
WTO General Council.
88. The Chairman proposed that the Steering Committee meet for its 3
rd  meeting on 3 October
2001, which would be approximately a month before the 4th WTO Ministerial Conference in Doha.
At that meeting, the Steering Committee would take stock of progress made under the Pilot Schemeand in the follow-up with regard to the five Round Table countries.
89. It was so agreed.
90. In the absence of any other business, the meeting was adjourned.WT/IFSC/M/2
Page 15
ANNEX 1
Provisional Agenda for the 2nd Meeting of the Integrated Framework Steering Committee
Thursday, 3 May 2001, 10.00 a.m.
1. The Integrated Framework Steering Committee (IFSC) will hold its second meeting on 3 May
2001, beginning at 10.00 a.m. in the Centre Willam Rappard.
91. The items proposed for the provisional agenda are as follows:
(a) Adoption of the agenda
(b) Indications by donors on specific pledges to the IF Trust Fund
(c) Report of the 25th and 26th Meetings of the Inter-Agency Working Group (IAWG)
(d) Revised Pilot Phase Work Program (Job No. 2423)
(e) Presentation by the World Bank on:
- Three pilot LDCs selected by the IAWG
- Indicators for assessing and monitoring progress during the pilot phase
(f) Five IF Round Table countries (i.e. Bangladesh, The Gambia, Haiti, Tanzania and
Uganda): report by ITC
(g) Statement by UNDP on the issue of overhead charges for the IF Trust Fund
(h) Coordination of trade-related technica l assistance: presentation by DAC/OECD
Secretariat
(i) Complementary activities
- Zambia Trade Sector Stakeholders' Meeting, Lusaka, 11 April 2001
(j) Any other business
__________