WORLD TRADE  
ORGANIZATION   
WT/GC/13  
19 October 1998 
 (98-4000) 
General Council Original:  English 
   
 
THE INTERNATIONAL MONETARY FUND, THE WORLD BANK 
AND THE WORLD TRADE ORGANIZATION 
 
Report of the Managing Director, President and Director-General 
on Coherence 
 
  Attached is the report of the Managing Dir ector of the International Monetary Fund, the 
President of the World Bank and the Director-General of the World Trade Organization on Coherence. 
 
 This is in accord with the Ministerial Decl aration on the Contribution of the World Trade 
Organization to Achieving Greater Cohe rence in Global Economic Policymaking. 
  
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 WT/GC/13 
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THE INTERNATIONAL MONETARY FUND, THE WORLD BANK 
AND THE WORLD TRADE ORGANIZATION 
 
Report of the Managing Director, President, and Director-General 
on Coherence 
 
21 October 1998 
  
  Contents Page  
 
 I. Coherence:  The Background and Mandate   3  II. Mechanisms for Improving Cooperation and Coherence  3 
 
III. Opportunities for Improving Cooperation and Coherence  5     WT/GC/13 
   Page 3  
 
I. COHERENCE:  THE BACKGROUND AND MANDATE 
1. The world economy has undergone fundamental changes since the introduction of the 
Bretton Woods system more than fifty years ago.   A far-reaching globalization of economic activity 
has altered the face of virtually all areas of in ternational economic relations.  Markets in goods, 
services, investment, and information have become progressively more integrated in a process that 
shows no sign of slowing down.  Other developm ents, such as financial innovation and technological 
advances, have strengthened compe tition both within individual countri es and internationally.  This, 
in turn, has resulted in an ever-growing interd ependence among economic policies, both within and 
between countries.  Trade, financial, and macro economic policies and developments are increasingly 
interlinked in each country, and affect other count ries more than ever before.  A better understanding 
of how policies fit together at the national level, and of their impact across nations, has become an 
essential part of sound economic policymaking. 
2. With globalization the need for more effe ctive coordination among trade, finance, 
macroeconomic, and devel opment policies has become both more  obvious and pressing, particularly 
as successful cooperation in each area of economic po licy contributes to progress in the others.  It is 
clear that this requires closer cooperation between the multilateral institutions with key roles in the 
formulation and implementation of different elemen ts of the global economic policy framework - in 
particular, the International Monetary Fund (IMF), the World Bank, and the World Trade Organization (WTO).  Indeed, each of these instit utions has a mandate for such cooperation, in 
Articles X and V of the respective Articles of Ag reement of the IMF and the World Bank, and in 
Article III of the Agreement Establishing the WTO.   In the case of the WTO, its Article III.5 makes 
direct reference to achieving greater coherence in global economic policymaking.  Moreover, at their 
meeting in Marrakesh in April 1994, Ministers instru cted the Director-General  of the WTO to review, 
with the Managing Director of the IMF and the Preside nt of the World Bank, the issue of coherence in 
global economic policymaking.  At subsequent  WTO Ministerial Meetings, in Singapore in 
December 1996 and in Geneva in May 1998, Minister s again saw the need to improve the coherence 
of international economic policymaking.  Such co herence may be viewed as efforts by the three 
institutions, individually and collectively, to wo rk toward harmonious impl ementation of common and 
complementary objectives. 
II. MECHANISMS FOR IMPROVING COOPERATION AND COHERENCE 
3. Within their respective jurisdictions, the IM F, the World Bank, and the WTO share the 
objectives of facilitating the expansion of intern ational trade and thereby contributing to the 
promotion and maintenance of high le vels of employment and real incomes and to the efficient use of 
the resources of all members, thus underpinning sust ainable growth.  There is substantial agreement 
among the three institutions as to the economic polic ies needed to achieve these objectives;  in 
particular, all three support trade and exchange  liberalization and see the rules-based multilateral 
trading system as a key element in the pursuit of global economic growth.  Nevertheless, building on 
past experiences, there is scope for improved coope ration and coherence in the work of the three 
organizations:  first, in the formulation of their policy framework, in terms of being better informed 
and supportive on issues of common concern, an d second, in their operational work with their 
respective members. 
4. Cooperation among the three institutions, in th e areas of their common and complementary 
objectives, (including the WTO’s precursor, the GATT) has been long and generally successful, 
although in many cases it was informal and based on ad hoc procedures.  The globalization of 
economic activity has made it useful to put the ex isting structures of cooperation on a more formal 
basis.  This scope for improved cooperation and c oherence is the foundation of the recently concluded 
Agreements between the WTO and the IMF, a nd between the WTO and the World Bank.   WT/GC/13 
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5. Those Agreements contain a number of mechanisms  designed to foster a coherent approach to 
policymaking.  Each Agreement provides for regular  consultations between the institutions with a 
view to achieving greater coherence in global eco nomic policymaking.  More substantively, the 
Agreements provide a formal framework for promo ting, in pragmatic and effective ways, uniquely 
closer relationships between the IMF, the Worl d Bank, and the WTO.  Under these Agreements, 
mechanisms are provided for staff representatives fr om each institution to attend the discussions of 
the others’ governing bodies, in order to gain a first-hand understanding of their concerns and 
priorities.  The Agreements allow for a represen tative of the WTO Secretariat to be invited to 
Executive Board meetings of the IMF and the Wo rld Bank on general and country-specific issues 
when there is substantial trade conten t or this is for the joint benefit of the institutions.  Similarly, the 
staff of the IMF and the Bank are invited to be  observers at most of the WTO bodies’ formal 
discussions.  The Agreements also provide for the IMF staff to be invited to the deliberations of the 
Dispute Settlement Body (DSB), where matters of jurisdictional relevance to the IMF are to be 
considered, and they provide for the staffs of the IMF and World Bank to observe deliberations of the 
DSB where it is expected that particular matters  of common interest will be under discussion.  The 
Agreements also facilitate cohere nce through enhanced procedures for the exchange of documents 
and other information.  Thus, documents are excha nged regularly soon after they are issued within 
each institution.  Moreover, each institution makes its da tabases available to the ot hers so as to foster 
up-to-date research and provide current information fo r policy development.  Further, the Agreements 
provide for enhanced contacts among the staffs of the three institutions, which could include joint 
research projects and staff exchanges, whenever they  need to coordinate their approach to certain 
issues.   
6. In furthering this pursuit of cooperation a nd coherence in global economic policymaking, 
existing avenues for cooperation will be fully utili zed and regularized, and additional mechanisms 
will be developed as needed.  Such efforts will focus on regular meetings among the heads of the 
three institutions and of the High Level Working Gr oup on Coherence, consisting of senior staff from 
the IMF, the World Bank, and the WTO, and furthe r encouraging technical and other meetings among 
the staff of the three institutions to discuss issues of common interest.   
7. The Director-General of the WTO, the Managing Director of the IMF, and the President of 
the World Bank meet and exchange communications as needed.  The exchange among the three heads 
of the institutions will continue and will, among ot her things, be driven by developments that may 
require a coordinated policy stance among the three institutions.   
8. The High Level Working Group on Coherence has met on several occasions since the group 
was formed in 1995 to study coherence and to  recommend ways to attain it in economic 
policymaking.  This group will continue to meet on a regular basis with a view to ensuring effective 
implementation of cooperation and coherence by thei r respective organizations.  The members of the 
Working Group will report periodically to their respective managements.   
9. To advance cooperation and coherence, the sta ffs of the three institutions will continue 
informal consultations with each other to facilita te each one’s advocating measures to its members 
that are consistent with the memb ers’ obligations and interests wh ile bearing in mind the need to 
avoid cross-conditionality.  These efforts will be  furthered and amplif ied by continuing and 
strengthening informal contacts at the time of form ulating trade policy advice, thus benefiting from 
the unique expertise of each institution.  Such c ooperation will continue to be conducted by staff 
including, as appropriate, visits to respectiv e headquarters of the three organizations. 
10.
 Moreover, tripartite and bilateral technical meetings of the staffs of the three institutions will 
be convened periodically to discuss issues of common in terest.  Subjects of  informal meetings held 
already included the development of quantitative measures of trade restrictiveness of individual 
countries;  another was the implications of the WT O General Agreement in Tr ade in Services (GATS) 
on capital transactions.  The staffs of the institu tions have found such meetings to be highly 
constructive.  The three institutions will continue to  encourage their staffs to meet informally;  it is    WT/GC/13 
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planned to hold tripartite seminars at regular intervals where the staffs of the three institutions could 
raise and discuss freely issues of common interest.   
11. This enhanced cooperation be tween the IMF, World Bank, and WTO will be conducted and 
developed in a manner that respects the mandate , confidentiality requirements, and the necessary 
autonomy in decision-making procedures of each institution, and that avoids the imposition on governments of cross-conditionality or additional conditions. 
III. OPPORTUNITIES FOR IMPROVING COOPERATION AND COHERENCE 
12. In a fast evolving global economy, it is necessary not to tie the three institutions into rigid 
themes of cooperation, but to respond flexibly to ne w challenges as they arise.  Consistency in advice 
by the three institutions to their members is a ce ntral element of the coherence agenda.  In this 
context, it is possible to identify some of the issu es that would appear to warrant closer cooperation 
and they are briefly discussed in the following paragr aphs.  In those areas, the three institutions attach 
high priority to a cooperative approach and to rele vant joint work.  The three institutions will be ready 
to expand their cooperation to address new issues a nd challenges within their mandates and resources. 
13. Cooperation will generally focus on issues that cl early form part of the area where the three 
institutions have common interests, overlapping mand ates, and complementary functions.  It will be 
undertaken with a view to providing better assistan ce and policy advice to their members in order to 
develop an international economic system that w ill promote stability, economic growth, and social 
development.  The three institutions will increase th eir efforts to improve the flow of information 
within each institution relating to th e work of the others and emphasi ze to their staffs the need to 
better take into account the implicati ons of their work on coherence.   
14. The expertise that the IMF and the World Bank ha ve in areas being considered for the WTO - 
such as foreign direct investment and issues related to sustainable development - can contribute to the 
WTO’s efforts to enhance the trad e community’s understanding of these issues.  In like manner, the 
WTO’s considerable legal and technical experience  in trade liberalization and related commitments, 
including the trade in services - where some sectors are of particular importance to the IMF and the 
World Bank - can be helpful to the formulation of policies in the IMF and World Bank.  Experiences 
in these and other areas will be useful to each  organization in implementing their common and 
complementary objectives,  not only with common memb ers, but also with countries currently seeking 
WTO accession who so wish.  In all areas of coopera tion, the three institutions are mindful of the 
need to avoid imposing on their members anything that could be interpreted as a form of cross-
conditionality.
1 
15. An important example of  common policy issues is the interrelationship between trade 
liberalization as the outcome of WTO-based negotiations  and unilateral trade reforms in the context of 
programs supported by the IMF and the World Bank.   When countries make autonomous reductions 
in trade barriers as part of IMF or World Bank program s, two questions can arise.  The first concerns 
the permanence of such liberalization, in order to provide greater predictability of policies and help 
promote private sector activity by avoiding policy reversals.  The second and related question is the 
degree to which such liberalization should receive “credit” in future trade negotiations.  Discussions 
among the three institutions could help elucidate the issues involved.   
16. Another common policy issue is trade liberali zation which, despite its expected positive 
long-run effects, may have transitory adverse im plications on the balance of payments, the fiscal 
                                                      
1 The Executive Boards of the IMF and the Bank, when approv ing the Cooperation Agreements, 
cautioned against the imposition of cross-conditionality, while the Marrakesh Declaration on the Contribution 
of the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking  calls on 
the WTO to avoid "the imposition on governments of cross-conditionality or additional conditions". WT/GC/13 
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accounts, and certain social indicators, which th e IMF and World Bank are well placed to help 
address, within the context of their existing facilities. 
17. Essential among the operational matters is the issu e of balance of payments disequilibria.  The 
IMF has a mandate to provide assistance to countri es that undertake adjustment policies to address 
balance of payments difficulties, while the WTO, in close consultation with the IMF - through the 
work of the WTO Committee on Balance of Payments Restrictions - evaluates measures or 
prospective measures by countries that introduce add itional trade protection on balance of payments 
grounds.  The two institutions will sustain their su ccessful cooperation in this area, which has worked 
well for a long period of time, and will adapt it as appropriate to the changing circumstances in the 
WTO Committee on Balance of Payments Restrictions , such as the recent inclusion of trade in 
services arising from the provisions of the GATS. 
18. Another operational matter is the already cons iderable cooperation and coherence at the 
working level in trade policy surveillance of the world economy and individual countries.  The three organizations draw heavily on the work and experti se of each other in such surveillance, such as 
utilizing in WTO reports the inputs from the IMF and the World Bank on macroeconomic, trade, and 
social developments;  similarly, the IMF and the World Bank use information on trade, trade 
measures, and related issues from WTO sources, in cluding to ensure that policy advice does not 
include WTO-inconsistent measures.  The exch ange of views and information on trade and 
trade-related issues is a basic requirement for coheren ce in policymaking in this area.  In this context 
there may be scope for an increased exchange of views and information;  this would improve the 
cross-fertilization of views and shared thinki ng among the staff of the three institutions. 
19. Also of operational concern is the interacti on among the three organizations in their work 
relating to the countries that are in accession to  the WTO.  The WTO and, in many cases, the 
World Bank, are active in helping interested c ountries prepare for accession, and this effort may 
benefit from closer cooperation with the IMF.  By  combining the WTO’s knowledge of what needs to 
be done to facilitate accession, with the country -specific knowledge accumulated by the IMF and the 
World Bank staffs, it should be possible to make the accession process faster and smoother for the 
benefit of the countries involved. 
20. Another operational issue concerns regional arra ngements, which have e xpanded substantially 
in number, scope, and coverage in recent years.  It is important to ensure that these arrangements 
contribute to a liberal and more integrated trad ing system and facilitate the process of multilateral 
liberalization.  As the pace and scope of libera lization by individual members of the arrangements 
might play a role in IMF and World Bank cons ultations and program support, regionalism would 
seem an appropriate area for technical level work on a coherent approach by the three organizations. 
21. Also at the operational level, human and institu tional capacity building is of clear importance 
for developing countries in their work to design and implement efficient reform policies and to 
facilitate their integration into the global econom y.  This is especially necessary for the least 
developed countries.  Significant initiatives by th e IMF, World Bank, and the WTO are under way to 
develop participation by developing countries in th eir work, and cooperation in this area should be 
pursued.  Thus, the World Bank and the WTO are c ooperating in a number of major regional seminars 
in Africa devoted to trade and economic capacity buildi ng;  they have also joined in a project to use 
information technologies to enable decision makers  in developing countries to understand and to 
make use of the rules and mechanisms of the WTO fo r the benefit of their countries.  The IMF and the 
World Bank were also two of the organizations  that were involved with the WTO and other 
multilateral organizations in the High Level Meeti ng for Least Developed Countries in October 1997.  
The Meeting endorsed the Integrated Framework fo r Trade-Related Technical Assistance for least 
developed countries and placed spec ial emphasis on human and instituti onal capacity building, and on 
increased efficiency in the provision of techni cal assistance to this end by the international 
institutions.  Following the High Level Meeting, th e three organizations continue to work on an 
agenda for further individual and cooperative work on these matters.    WT/GC/13 
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22. Among the array of issues to be addressed at  both the policy and operational level are the 
trade prospects for developing countries and for coun tries in transition.  Economic growth in these 
countries is crucially dependent on a favorable global economic environment, including access to the 
markets of advanced economies.  The environment for faster export growth and increased inflows of foreign direct investment improved with the outcome of the Uruguay Round and the WTO Ministerial Conferences in Singapore and Geneva.  It should c ontinue to improve under the implementation of the 
built-in agenda of the Uruguay Round and the wo rk on issues related to capital flows being 
undertaken by the IMF and on investment by the WT O.  Nevertheless, the gradual lowering of the 
preference margin to imports from developing coun tries may have altered their range of trading 
opportunities.  At the same time, many advanced economies have expressed their intention to revise 
and expand their programs that operate  under the Generalized System of Preferences in or der to assist 
developing countries.  Furthermore, structural adjustment in many developing and transition 
economies should enhance the competitiveness of thei r exports.  The IMF, the World Bank, and the 
WTO are well placed to cooperate in identifying such changes and in formulating a framework on 
which to build better policies to enhan ce developing nations’ trade opportunities. 
23. Another matter of policy and operational concerns  is the efficiency versus revenue aspects of 
tariffs.  Reductions in tariffs, and the simplification of their structure, are pursued in multilateral trade 
negotiations, as well as in programs supported by the IMF and World Bank, as a means of increasing 
efficiency and expanding trade.  Also, tariff bindings are an important means of providing security of market access.  At the same time, tariffs can be an important source of budgetary revenue in many 
developing and transition ec onomies.  Clearly, this is an area that  has important implications for the 
policies and day-to-day work of the IMF, World Bank, and WTO. 
24. The matter of net food importers and least deve loped countries is of concern to a number of 
WTO members.  An issue that has received consider able attention concerns potential effects of the 
Uruguay Round results on net food importers and on the least developed countries.  The issues 
involved are a matter of importance for all thre e institutions, and indeed the WTO seeks the 
cooperation of international financ ial institutions, mainly the IMF and the Bank, on these matters.  
The role of the financial institu tions could be important in provi ding financing under their existing 
facilities to support the necessary adjustments.   
25. As mentioned above, the list of issues where cooperation toward achieving greater coherence 
is required will need to be flexible and subject to  ongoing review, given the pace of change in the 
world economy and the multifaceted nature of many policy issues.  As new challenges arise, and as 
the three institutions gain from greater exposure to  each other’s work and concerns, new areas of 
cooperation will certainly be entertained.  Th e High Level Working Group on Coherence will 
regularly review at its meetings the progress achieved and discuss whether cooperative activities 
should expand into new areas. 
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