RESTRICTEDWORLD TRADE
ORGANIZATIONWT/LDC/SWG/IF/15*
11 April 2001
(01-1866)
Sub-Committee on Least-Developed Countries
REPORT ON THE SEMINAR BY THE INTEGRATED FRAMEWORK CORE AGENCIES
The Policy Relevance of Mainstreaming Trade Into Country Development Strategies:
Perspectives of Least-Developed Countries
WTO, Geneva, 29-30 January 2001
Organized by the six core IF agencies:  IMF, ITC, UNCTAD,
UNDP, WORLD BANK and WTO
Table of Contents
I. BACKGROUND ................................................................................................................... ....3
II. EXECUTIVE SUMMARY ......................................................................................................5
III. MODERATORS' CONCL UDING REMARKS ....................................................................7
IV. OPENING SESSION............................................................................................................. ...9
V. PANEL PROC EEDINGS.......................................................................................................16
1. PANEL A: TRADE, MACROECONOMIC  AND REGULATORY  POLICIES .............16
2. PANEL B: MAINSTREAMING: CONCEPTS, APPROACHES,
IMPLEMENTATION  AND FUNDI NG ...............................................................................19
3. PANEL C: DOMESTIC CONSTITUENCY FOR MAINSTREAMING:
EXCHANCE AND REVIEW OF CO UNTRY EXPERI ENCES. ......................................22
4. PANEL D: GLOBAL DIMENSIONS AND CORE ISSUES IN
MAINSTREAM ING...............................................................................................................23
5. PANEL E: COORDINATION OF THE DELIVERY OF TRADE-RELATED
TECHNICAL ASSISTANCE AMONG BILATERAL AND MULTILATERAL
DONORS. ........................................................................................................................ ........25
A. ANNEXE S...................................................................................................................... ..........28
I. MESSAGE FROM MIKE MOORE,  DIRECTOR GE NERAL, WT O .............................28
II. OPENING ST ATEMENTS....................................................................................................29
Welcoming Remarks by Mr. Mike Moore, Director-General, WTO ............................................... 29
H.E. Mr. M.D. Abdul Jalil, Minister of Commerce, Bangladesh ...................................................... 32
H.E. Mr. Jonathan Fried, Senior Assistant Deputy Finance Minister, Canada .............................. 34
H.E. Honourable Kweronda Ruhemba, Minister for Economic Monitoring, Office of the
President, Uganda ............................................................................................................................... .. 38
                                                     
* In English only.WT/LDC/SWG/IF/15
Page 2
H.E. Dr. Nkosana Moyo, Minister of Industry and International Trade, Zimbabwe ..................... 42
H.E. Mr. Koichi Haraguchi, Ambassador/PR of Japan, Geneva ...................................................... 43
III. SEMINAR PROGRAMME ...................................................................................................47
IV. LIST OF P ARTICIPANT S....................................................................................................54
V. PAPERS/LEAD PR ESENTATI ONS....................................................................................62WT/LDC/SWG/IF/15
Page 3
I. BACKGROUND
1. At the 21st Meeting of the Inter Agency Working Group (IAWG),† senior officials of the core
agencies,‡ responsible for the implementation of the Integrated Framework for Trade-Related
Technical Assistance for Least-Developed Countries (LDCs), agreed to co-host a joint seminar on
"The Policy-Relevance of Mainstreaming Trade Into Country Development Strategies – The
Perspective of LDCs".  The seminar was organi zed and hosted by the World Trade Organization
(WTO), 29-30 January 2001.
2. The seminar was part of the implementation process of the results of the agency review of the
Integrated Framework, as mandated by Members.§  At the meeting of Heads of IF Agencies and
representatives, 6 July 2000, it was agreed that "mainstreaming" (or integrating) trade into countrydevelopment plans and poverty reduction strategies was a vital component of the reform of the
Integrated Framework.
**  Following the process of the IF review, based on the report of independent
World Bank consultants, and on consultations within  the memberships/Boards of the six6 agencies,
one of the lessons that had been drawn from three years of IF implementation was that trade was a key
component of development policy and, therefore, c ould not be viewed as "stand-alone".  The results
of the review had also made evident that the benefits of trade-related technical assistance could only
be fully maximized within a coherent policy fram ework for development and poverty reduction.  The
benefits from the stand-alone delivery of trade-related technical assistance would either be minimal or
unrealised. Of equal significance, as agreed by the agencies was that hosting the seminar, on an urgent
basis, would be part of the broader preparatory process for the Third United Nations Conference onLeast-Developed Countries (LDC-III).  It was agr eed that the seminar outcomes would serve as a
"deliverable" (contribution) to the conference on LDCs.
3. The seminar brought together three distinct bu t related communities: the trade, development
and finance communities.  Approximately 200 participants participated in the seminar.  Presentations
and the discussions were organized in five panels, A, B, C, D, and E.  The last panel, F, was a wrap-
up sessionpanel, in which Concluding Remarks were presented by Mr. Jonathan Fried, Senior
Assistant Deputy Finance Minister, Canada, on his personal responsibility.  The Seminar noted the
Concluding Remarks and agreed that they be circulated.
4. Responding to requests by donor Members and LDCs, and in implementing the long-standing
objective of enhancing dialogue amongst multilateral agencies, LDCs and donors, meetings were
arranged on the margins of the seminar between LDCs and World Bank officials, led by Mr. Kermal
Dervis, Vice-President for Poverty Reduction and Economic Management, and consultations alsobetween participating World Bank staff and donor representatives.
5. Participating World Bank staff led by Vice-President Kemal Dervis and WTO Senior
Management and participating WTO senior staff,  led Mr. Andy Stoler, WTO Deputy Director-
General, also met to exchange views on trade a nd development issues, including examining ways of
strengthening the Integrated Framework and ensuring that trade priority areas of action were integralto development.
                                                     
† World Bank, Washington D.C., 14-15 September 2000.
‡ International Monetary Fund, International Trade Centre, United Nations Conference on Trade and
Development, United Nations Development Programme, the World Bank, and the World Trade Organization.
§ WT/LDC/HL/1/Rev.1.
** WT/LDC/SWG/IF/2: Joint Statement on the Mandated Review of the Integrated Framework for
Trade-Related Technical Assistance to Least-Developed Countries (IF) by the Six Core Agencies (IMF,
UNCTAD, UNDP, World Bank, and WTO).WT/LDC/SWG/IF/15
Page 4
6. Many participants at the seminar, in light of  the value of the seminar in improving their
understanding of the interaction between trade and development policy, considered that the seminar
should be conducted regionally.  Developing country participants were also in support of this view.WT/LDC/SWG/IF/15
Page 5
II. EXECUTIVE SUMMARY
7. The seminar took place against the background that the greatest challenge facing the global
economy today is to meet the internationally agreed goal of halving poverty by the year 2015.  The
overriding challenge is poverty alleviation.  Most of the poor are in the LDCs.  Assisting theintegration of LDCs into the multilateral trading system and the global economy will contribute to the
poverty reduction goal.  Trade liberalization and reform are indispensable key elements contributing
to the "integration objectives" of faster growth, increased earnings and reduced poverty. To this end,
strengthening the multilateral trading system and ensuring that progress in liberalization and reform
continues unabated is urgent.
8. However, frequently, trade priorities, including the implementation of WTO obligations and
commitments, are neither integral to overall development plans, nor to strategies for povertyreduction, as expressed in the Poverty Reduction Strategies Papers (PRSPs).  Furthermore, in many
instances, core trade priorities are not taken into account by finance and planning ministries.  Thus,
although openness to trade is strongly associated with economic growth and poverty reduction, trade
as a growth strategy  is yet to be mainstreamed  into development plans and poverty reduction
strategies of many of the LDCs and developing countries as well.  The principal objectives of the coreagency seminar, therefore, were to:
(a) review the concept, methods and process of mainstreaming trade priorities into
overall development plans and poverty reduction strategies;
(b) identify the core issues critical to main streaming, at both the domestic and global
levels;
(c) focus on some case studies with a view to identifying good practices of policy-
relevance for mainstreaming trade into overall development plans and PRSPs;
(d) consider the contributions of the IF trade-related technical assistance to the
mainstreaming of trade priorities into development plans and PRSPs; and,
(e) enhance coordination and improve the interface between multilateral and bilateral
donors in the delivery of trade-related technical assistance to LDCs within the
framework of development vehicles, in particular the Poverty Reduction Strategy
Papers (PRSPs).
9. Lead presentations were made in five panels, on the basis of which selected panellists and
seminar participants intervened in an exchange of views.  A variety of views were expressed, enriched
by focus on specific regional and country experiences (from Asia-Pacific, The Gambia, Malawi,
Mauritania, and Zambia), in Panel C.
10. The full exchange of views, over the two da ys, on a broad range of issues, arising from
"mainstreaming trade" and the delivery of trade-related technical assistance, made evident strong
convergence on several key points, as follows:
• Trade liberalization and reform are necessary a nd vital for growth and development, but not
sufficient.  Mutually supportive companion policies are required, such as from stable
macroeconomic policies, sound and pro-growth re gulation and competition policy, investments in
infrastructure, human resource development, governance issues and the rule of law. Much of the
criticism of trade liberalization disregards the fact that several factors intervene in the relationship
between trade liberalization and reform, on the one hand, and growth and development, on theWT/LDC/SWG/IF/15
Page 6
other.  Greater efforts need to be made to ensure mutual interaction between trade liberalization
and complementary policy areas;
• LDCs have undertaken autonomous liberalization measures.  At the same time, the benefits of
maintaining the pace of reforms as well as continuing with domestic reform priorities wereunderscored;
• The Integrated Framework (IF) is a valuable mechanism for coordinating the delivery of trade-
related technical assistance to LDCs and for "mainstreaming" trade integration strategy chapters
(i.e. trade priority areas of action) into development plans and PRSPs;
• The benefits from random and "stand-alone" trade-related technical assistance are limited, with
little impact.  Meaningful and long-term benefits from trade-related technical assistance are
realized when delivered within a coherent policy framework;
• PRSPs are dynamic development vehicles in which LDCs' strategies for poverty reduction are to
be pursued. To ensure a growth strategy, key to generating resources for poverty reduction, trade
integration strategy chapters (or trade priority areas of action) should be integrated into PRSPs, onthe basis of national choice and ownership;
• Bilateral and multilateral development partners urgently need to achieve coordination in the
increasing proliferation of trade-related technical assistance projects and multiplicity of policy
frameworks.  The rapid evolution and multiplicity of donor/agency policy frameworks,
programmes, and projects have led to puzzlement and frustration in the LDCs.  The IF and the
PRSPs offer development partners a unique opportunity for improved coordination;
• The Trade Policy Review Mechanism of the WTO should be enhanced so that it becomes a
mechanism to further assist LDCs with trade- related human capacity-building in the course of
trade policy reviews, and a mechanism also for assisting with implementing the "mainstreaming"
of a trade integration strategy chapter into LDCs' development plans and poverty reduction
strategies.  It is suggested that the WTO trade policy review exercise could benefit from the active
involvement of other multilateral economic inst itutions such as the IMF, UNCTAD, and the
World Bank;
• The launch of a new Round of Trade Negotiations would act as an insurance against
protectionism, for comprehensively addressing real and perceived systemic imbalances, for
generating growth, necessary for proceeding rapidly with the agenda for poverty reduction and
development.  Implementation of existing agreemen ts is important for the credibility and integrity
of the system; and,
• The trade negotiating capacity of the LDCs should be strengthened to enable them to participate
effectively in the multilateral trading system and the global economy.  Developing and LDC
participants accorded premium on the need for sequencing reforms: (to reduce the potential fordisruptive efforts that tend to accompany reform efforts).WT/LDC/SWG/IF/15
Page 7
III. MODERATORS' CONCLUDING REMARKS††
11. In Panel F, the Moderator, Mr. Jonathan Fried, Senior Assistant Deputy Finance Minister,
Canada, provided Concluding Remarks, on his own personal responsibility.  The seminar "took note"
of the Concluding Remarks, as follows:
12. A sustainable development strategy requires, inter alia , approaches that are pro-poor and pro-
growth to achieve the globally agreed poverty reduction targets for 2015:
- pro-growth, because private savings and investment generate wealth necessary to fund
public goods and investment in social infrastructure; and
- pro-poor, because developing appropriate macroeconomic, fiscal and regulatory
frameworks necessarily entails adjustment to a globalized economy which in turnrequires investment in health, education and social infrastructure.  This is required to
look after the most vulnerable and to ensure equitable income distribution.
13. Improving the ability of LDCs to take advantage of the benefits that liberalized trade can
provide is, in most countries, subject to the empirical evidence, a key element supporting the creation
of a pro-growth environment.
14. Trade should properly be "mainstreamed" into national development plans, i.e. trade should
be integrated into development strategies, while recognizing the efforts already made by many LDCs
to lower trade barriers autonomously, acknowledging discussions at the WTO on mainstreaming trade
into development and noting the prospects for improving market access in all countries through the
early launch of new trade negotiations.
15. Mainstreaming trade must be seen as but one part of a pro-growth development strategy,
supporting a stable macro-economic and fiscal policy framework and pro-competitive regulatory
policies and rule of law through enforcement of contracts.
16. Sequencing is key.  Trade benefits will not likely flow to LDCs unless trade liberalization is
synchronised with the development of a sound economic framework at home and alongsideappropriate social infrastructure.
17. Country ownership is essential.  This requires effective coordination across ministries in
government, and partnership between the government and private sector participants in the economy,
as well as partnership between the recipient government and donor agencies.
18. Donor coordination among bilateral donors, within and between multilateral and regional
agencies and even at the country level "on the groun d" is lacking and in need of improvement. There
are too many reports and frameworks and there is too little coordination.
19. The general mood of the seminar was supportive of the IF as a promising platform that, if
implemented well as a shared responsibility among donors, recipients and multilateral agencies alike,
can promote mainstreaming of trade and improved donor coordination within a country-owned
Poverty Reduction Strategy Paper (PRSP) framework through the country assistance strategy (CAS)
                                                     
†† Electronic and hardcopy transcripts of the entire seminar are available to Members and observers on
request.WT/LDC/SWG/IF/15
Page 8
process.  It might also provide a model for cost-sav ing in delivery of trade related technical assistance
and capacity-building through improved coordination.
20. Funding of a trust fund to permit an improved IF process to be tested on a pilot project basis
was broadly supported.
21. As with any well-administered program, ongoing evaluation is key.  The case studies on
trade-related technical assistance in Asia-Pacific and Sub-Saharan African countries provide
important lessons for future programs, including regarding the autonomous liberalization undertaken
and proposed by both developed and developing countries.
22. The Trade Policy Review (TPR) process could be enhanced to provide better guidance to
LDCs on trade rules and liberalization within the broader context of national development plans.
World Bank, IMF and bilateral country directors could be invited to participate in the TPRs.
23. Improved statistics would be of immeasurable assistance to donors.
24. The results of this seminar as well as its papers and presentations should be forwarded to
those responsible for preparations for the Third UN Conference on Least-Developed Countries (LDC-
III), the UN Conference on Financing for Development, and bilateral, regional and multilateral donor
agencies.
25. To conclude the seminar, following the proposal by Minister Fried, participants agreed to
request the Director-General to circulate the outcome of the seminar to:
- the Okinawa Workshop on Trade-Related Capacity-Building, 2-4 March
2001;
- Third United Nations Conference for Least-Developed Countries, Brussels,
14-20 May 2001;
- the Meeting on Financing for Development (FFD); and to,
- other multilateral and regional institutions and bodies.WT/LDC/SWG/IF/15
Page 9
IV. OPENING SESSION‡‡
26. The Seminar was opened by Mr. Mike Moore, Director-General, WTO, and then moderated
by Mr. Andy Stoler, Deputy Direct or-General. The five key speakers highlighted several issues taken,
in the course of the seminar.
Mike Moore, Director-General
• The Integrated Framework, the first-ever attempt at institutionalizing inter-agency cooperation, is
a test of the institutions themselves. All the agencies are firmly committed to the success of theIntegrated Framework;
• There is a desperate urgency to ensure that trade priority areas of action are integrated into overall
national development plans and strategies for poverty reduction.  Trade liberalization and reform
are indispensable for growth and poverty reduction, but they will be neither sufficient nor enough.
Mutually complementary policies are required;
• Mainstreaming trade is the single most important element of the new IF, and the best vehicle for
the mainstreaming process is the development ve hicle of the PRSPs, developed by the World
Bank and the IMF;
• There is a need to build a bridge that connects the trade, finance and development communities in
order to ensure comprehensive strategies required for development and poverty alleviation;
• There if urgent necessity for a wider set of negotiations – a new Trade Round.  Progress has been
made, but imbalances, both real and perceived, remain.  Much more rapid progress is required;and,
• There have been significant improvements in market access opportunities for the LDCs.  The
improvements follow on the consultations that the WTO initiated, Post-Seattle.  Twenty-sevenMembers have taken or proposed further measures to improve market access for the LDCs.  These
include, inter alia , Canada, New Zealand, Norway, Europe an Commission, Japan and the United
States.
H.E. Mr. MD Abdul Jalil, Minister of Commerce, Bangladesh, (LDCs' Coordinator)
• The participation of the six core agencies in the Integrated Framework reflects their commitment
to the cause of the LDCs.  The organization of this seminar by the WTO and the presence of Mr.Mike Moore, symbolises the commitment of th e WTO  and the personal commitment of the
Director-General to the cause of the LDCs;
• There must be coherence in the activities of multi lateral agencies with respect to any LDC.  The
Integrated Framework, incorporating the progra mmes of the six organizations, is a good way
forward;
• Improving market access opportunities for LDCs and, in particular, obtaining duty-free, quota-
free market access will be an important step in the integration of LDCs into the trading system;
                                                     
‡‡ The full text of the Opening Statements are contained in Annex II of this document.WT/LDC/SWG/IF/15
Page 10
• The fundamental issue for LDCs is to eliminate poverty, hunger, deprivation, malnutrition and
disease.  In some cases, LDCs face new challenges, such as with HIV/AIDs that were unknownuntil recently.  LDCs face growing marginalization;
• The social costs of globalization cannot be ignored.  LDCs will take risks, but risks will depend
on the compact that they are able to build with their development partners.  LDCs will open uptheir markets and remove barriers, but are the developed countries ready to reciprocate;
• International finance has a leading and strong role to play in LDCs.  LDCs need to access finance
available in developed country markets.  LDCs require assistance to bridge the "digital divide";
• Export-led growth and industrialization are important in order to achieve economic development.
The days of self-sufficiency and import substitution strategies are over;
• The power of multinational companies has grown.  The role of governments must be reviewed in
the changing scenario.  The right environment must be provided so that the private sector can
flourish.  State-owned enterprises should be privatized;
• ODA trends do not show significant increases. LDCs need to rely more on private sources of
capital.  LDCs and development partners need to work together to encourage private sector firms
to invest in LDCs; and,
• The current HIPC programmes have not been able to assist a substantial number of LDCs.  Not
much progress will be made in LDCs, unless the debt burden is relieved.
H.E. Mr. Jonathan Fried, Senior Assistant Deputy Finance Minister, Canada
• All countries share the goal of fostering economic growth in a manner consistent with sustainable
development.  This goal is critical for LDCs, many of whom have not participated in norbenefitted form the expansion of the world economy and trading system in the last few decades;
• Poverty reduction is not simply a matter of re-distributing income and wealth.  Economic growth
is required to generate additional income and w ealth to re-distribute. No amount of HIPC debt
reduction or ODA can guarantee that the internationally agreed goal of halving poverty by 2015
can be attained;
• Development policies need to recognize that private sector-led investment must be the engine for
growth to meet LDCs' needs;
• Developing countries must focus on strengthening institutions, if development policies are to
successfully stimulate the private sector;
• Savings and investment will flow to countries where good economic governance prevails.
Businesses prosper in a conducive regulatory environment, characterized by soundmacroeconomic fundamentals, mutually agreed bargains between investors and government,
transparency, predictability and fairness.  It also includes governance based on the principles ofinclusion, the rule of law, and respect for cont racts.  Good economic governance is vital for
development and growth and, thus, for poverty reduction;
• Emphasis by donors, such as the Canadian International Development Agency, on development
spending, is shifting towards effective integration and coordination of a range of developmentWT/LDC/SWG/IF/15
Page 11
activities, including capacity-building projects.  This can catalyse human resource development
and good economic governance;
• Domestic savings and investments (two key elements of private sector activity) are essential
elements of development strategy.  Promoting trade is the third essential element for economicgrowth.  There is no evidence of any country that has been successful in achieving sustainable
growth without meaningful participatio n in the international trading system;
• Increased integration of the developing world into the global trading system is the key goal and a
critical component in the launch of a new round of multilateral trade negotiations.  The earlylaunch of the new round is the key to the development prospects of developing countries in
general and the LDCs in particular;
• Mainstreaming trade encompasses building the necessary institutional capacity in developing
countries to permit traders to participate in the international trading system. It does not simply
mean teaching people how to read WTO Agreements – which is only a small part of the story.Mainstreaming trade, ultimately, means giving greater visibility to linkages between trade and
other related economic policy areas.  Mainstreaming trade means investing in an environment that
will assist in achieving sustainable long-term economic growth.  It will require changes in the
trade regime, the financial and commercial institutional infrastructure, and in such areas as
accounting, corporate governance, supervision of financial institutions, etc.  Mainstreaming trade,
for instance, means providing capacity to ensure th at goods meet internationally agreed standards
for safety, and to show that agricultural products come from a pest or disease free area;
• Mainstreaming trade requires collective responsibility and all stakeholders  to increase emphasis
on trade-related technical assistance and capacity-building in on-going programmes:
- the IMF needs to consider the impact of government revenues of potential
and required changes in trade policy and pay attention to devising methods to
compensate for any losses in tariff  revenue that may occur from trade
liberalization;
- the ITC should continue to pursue trade enhancement activities, in particular
in supply-side development and promoting private sector readiness for
export;
- UNCTAD and UNDP should provide assistance in managing domestic
adjustments to a more open trade environment;
- the World Bank should be more pro-active in engaging with national trade
policy makers to determine the nature and extent of trade-related technical
assistance and capacity-building needed in a country;
- The WTO could lever existing mechanism to achieve desired results, for
instance, through the use of trade policy reviews to help build capacity inLDCs, and to understand their rights and obligations as Members;
- Trade Ministers need to become more involved with Finance Ministers, in
national debates, on the elaboration of poverty reduction strategies; and,
• Donor countries need to re-examine development assistance priorities to ensure coherent
messages across different development assistance mechanisms and institutions;WT/LDC/SWG/IF/15
Page 12
• The Integrated Framework was initially conceived as an instrument for coordination amongst
agencies.  The IF can help in integrating country defined and owned trade-related technicalassistance and capacity-building within a broad development and planning framework.  The main
development vehicle is the Poverty Reduction Strategy Process.  If successfully re-mounted, the
IF, which currently focuses on the needs of LDCs, can serve as an example for low and middle
income developing countries, on how to best integrate trade as a central component forcomprehensive development, and for achieving growth;
• It is important that trade policy issues figure centrally in the formulation and implementation of
poverty reduction strategies and country assistance strategies;
• Country ownership of policies is vital, if they are to be effective;
• Countries may focus on regional integration as a means of increasing trade and promoting
economic growth, as long as it is consistent with the principles of the WTO.
Honourable Kweronda Ruhemba, Minister for Ec onomic Monitoring, Office of the President,
Uganda
• LDCs face several challenges such as supply-side constraints and low productivity levels, which
make it difficult to take advantage of open markets.  Other challenges include lack of investment
funds, and a political and economic environment that is not conducive to the attraction of foreign
investment;
• LDCs need to act aggressively to add value to primary products;
• A more coordinated approach to international development, finance and trade policies is a means
towards breaking the vicious circle of low investme nt, low growth, low share of global trade, and
increasing debt, all of which frustrate the goal of poverty eradication;
• There is a need to mainstream trade policy, programmes and projects into the overall policy
framework for development and poverty eradication;
• Multilateral agencies, bilateral donors and national authorities need to come together to initiate
sector-wide working groups in relation to trade policies.  This would be one way of finding a
solution to agency cultures in which each one of them would like to pursue its own agenda;
• There is a need to integrate trade into country assistance strategies;
• There is a need to recognize that the policies that LDCs have pursued, based on their static
comparative advantage of abundant natural resources and unskilled labour, have not succeeded.
There has been a loss of market share, not only because of inefficient agricultural practices, weak
marketing, poor infrastructure and civil conflicts, but also because of increased competition from
new commodity producers.  Urgent action is required to move into higher value-added resource-
based industries with more buoyant market prospects;
• There is a major problem with resource waste and confusion in the policy-making process as the a
result of uncoordinated technical assistance initiatives, which lead to duplication of efforts, in
those areas that are fashionable with donors, and neglect, in those areas that are not.  The solution
to this problem is a joint programming donor-recipient programming exercise that seeks to
optimise return from the scarce technical assistance resource available;WT/LDC/SWG/IF/15
Page 13
• Technical assistance programmes are still too supply-driven, reflecting the donor interest, rather
than demand-driven, responding to national concerns;
• To enhance programme implementation in capacity-building, it is imperative that partners reach
agreement on shared objectives and commit themselves to the major policy and resource actions,
essential to achieving shared objectives;
• Debt relief is not the long-term solution to poverty.  The long-term solution is to seek means
whereby export growth can generate sustainable livelihood options for many of the poor, by the
development of traditional and non-traditional exports.  This requires ensuring market access forLDCs' exports;
• It is an irony that developing countries who promote the virtue and possibilities of export led
growth find that when they begin to succeed, the protection lobby in the developed countries
succeeds in raising barriers impeding access to developed country markets;
• LDCs need to enhance their capacity to coordinate similar to the necessity for agencies to
coordinate.  In the global economy, individual LDCs find themselves marginalized.  LDCs'
individual economies are too small to carry much weight at the international negotiating table.  Itis only by identifying common interests, understanding each others' problems and experiences and
acting together that they can hope to be heard;
H.E. Dr. Nkosana Moyo, Minister of Industry and International Trade of Zimbabwe
• There is an inherent contradiction in seeking to discuss development, on the one hand, and
poverty reduction, on the other.  Developing countries have to focus on development before
poverty alleviation, because wealth has to be created before it can be distributed;
• A country that seeks integration into the global economy has to be able to identify trading
opportunities and take advantage of them.  It w ould also need to fulfill its multilateral trade
obligations as well, formulate and pursue development strategies within the framework of these
obligations and opportunities, defend its acquired trade rights and privileges, set trade objectives
and effectively pursue them in any negotiations;
• Economic growth, while essential, is not always sufficient for sustained poverty reduction.
Furthermore, trade liberalisation, defined in terms of the reduction of border protection, cannotalone guarantee economic growth;
• Trade expansion strategies should encompass a broa der set of country-level initiatives within the
context of an appropriate macroeconomic environment, and a comprehensive approach to overalldevelopment goals and poverty reduction strategies;
• Supply-side difficulties should be addressed thr ough investments in necessary infrastructure and
human capital development, as well as institutional, and the creation of a conducive legal
environment to increase investor confidence;
• Trade policy should be consistent with other complementary policy areas such as foreign
investment, competition, environmental protection and labour practices;
• Sequencing is important in the implementation of policy reforms;WT/LDC/SWG/IF/15
Page 14
• Developing countries require support and assistance from donors and multilateral agencies, in the
form of direct investments, technical assistance, support for regional integration and access tomarkets.  Support will also involve trade facilitation and debt relief;
• There are important linkages that need to be borne in mind.  For instance, improved market access
without trade-related technical assistance and capacity-building to improve supply-side responseswill have little effect;
• Technology transfer issues need to be addresse d.  It is imperative for developed countries to
improve access for developing countries through, inter alia , acquisition on a non-profit, non-
commercial basis, and providing incentives for technology transfer;
• Developing countries in general, and Africa in particular, must generate growth in order to
achieve the internationally agreed target of halving poverty by the year 2015;
• It is critical that domestic policies in developing countries must be mutually supportive.  Policy
coherence is an imperative;
HE. Mr. Koichi Haraguchi, Ambassador/Per manent Representative of Japan, Geneva.
• Trade is a powerful engine for economic development.  Many countries, including post-war
Japan, have achieved rapid economic development through trade expansion with other countries;
• Increased exports generate more income, but is necessary to improve market access in order to do
so.  LDCs cannot expand trade, no matter how hard LDCs try, unless there is improved market
access;
• International trade rules need to be strengthened because without them, international trade can
still be subjected to abusive management by economically strong countries;
• There still remains much room for further improv ing market access and strengthening rules.  This
is why some countries, including Japan, have stressed the need to launch a new round of
multilateral trade negotiations at the earliest opportunity;
• Special considerations are needed for some developing countries to assist them with
implementing WTO rules and taking advantage of the open, rules-based system.  Japan, for
instance, is preparing necessary legislative measures for establishing special preferential treatmentfor LDC products;
• It is crucial to find appropriate solutions on as many implementation issues as possible, by special
measures.  A basic approach is to promote trade-related capacity-building in developing countries;
• Trade-related capacity-building in developing countries should be promoted to enable them to
exploit improved market access opportunities, to become more credible partners, and thus moreactive beneficiaries of the rules-based trading system;
• Japan attaches importance to building trade-related capacity in developing countries for trade
rules compliance and trade competitiveness capacities.  International cooperation for assistance to
developing countries falls into two categories: trade rules capacity to improve knowledge and
implementation of the rules; and, trade-related capacity-building to enable the use of improved
market access on a competitive basis.WT/LDC/SWG/IF/15
Page 15
• Mainstreaming trade into country development strategies requires more qualitative and
quantitative efforts.  To this end, more coordination is needed amongst donors and agencies;
• Japan supports the efforts to re-vamp the Integrated Framework and make it workable.  An
important objective is to improve coordination amongst the aid and trade communities.  The
Integrated Framework is important in this respect because it could be effective in bringing the
different communities together and promoting dialogue amongst them;
• In addition to the Integrated Framework and to implement trade-related capacity-building efforts
more effectively, it is necessary to promote country-by-country approaches, to reflect more
specifically individual country needs, as well as promote also the agreement-by-agreement
approach; Japan has been exploring these approaches based on the proposal by the European
Commission.  These approaches need to be flexibly employed so as to promote capacity-building
most effectively.WT/LDC/SWG/IF/15
Page 16
V. PANEL PROCEEDINGS
1. PANEL A: TRADE, MACROECONOMIC AND REGULATORY POLICIES
27. Panel A focused on the economics of trade policy, trade reform and liberalization, as part of a
wider package of domestic economic reform.  The starting-point of the panel was that trade reformand liberalization were necessary components of comprehensive policies for poverty alleviation and
development.  Trade liberalization while vital to development, does not stand-alone.  Companion
policies are also required, as part of a wider package of economic reform, without which the
dividends from an open, multilateral trading system are minimal, and integration into the global
economy will be retarded.  The panel examined essential and required companion policies that
constituted part of the wider package of economic reforms, and which intervened in the complex
relationship between trade liberalisation, poverty alleviation and development.
28. Two lead presentation to establish the basis for the discussions were made by:
(i) Mr. Richard Eglin, Director, Trade and Finance Division of the World Trade
Organisation; and,
(ii) Professor Fredéric Jenny, Chairman of the WTO Working Group on the
Relationship between Trade and Competition Policy.
29. Following the lead presentations, five (5) panellists intervened.  The panellists were:
(i) H.E. Mr. Srinivasan Narayanan, Ambassador/Permanent Representative of India to
the WTO, Geneva;
(ii) Mr. Philippe Brussick, Chief, Competition, Law and Policy and Consumer
Protection Section, UNCTAD;
(iii) Mr. Clem Boonekamp, Director, Tr ade Policies Review Division, WTO;
(iv) Mrs. Anh-Nga Tran-Nguyen, Head, Investme nt Issues Analysis Branch, Division on
Investment, Technology and Enterprises Development; and,
(v) Mr. Grant Taplin, Director, IMF Office, Geneva.
Key Issues
• Although there have been some gains, LDCs are not benefitting as much as had been hoped for
from the expansion of international trade and from the functioning of the multilateral trading
system and the global economy;
• The challenges facing LDCs are of such magnitude that the WTO alone cannot address it.  The
extent of the challenges exceeds the core responsibilities, expertise and resources of the WTO;
• Trade liberalisation (or market openness) and reform are vital and necessary.  They enlarge the
potential market of countries, allowing them to benefit from scale economies, and technology
transfers, through capital goods and knowledge.  However, trade liberalisation and reform are not
sufficient.  They will not solve all problems of  development.  They require complementary and
mutually supportive policies on a much broader platform of economic reform, includingWT/LDC/SWG/IF/15
Page 17
macroeconomic, regulatory and structural reforms.  Investments in health and education are
critical;
• Trade liberalisation in an unstable macroeconomic context is self-defeating.  There are several
areas of weaknesses in LDCs.  These include exchange rate instability and exchange rateovervaluation.  Overvalued (appreciated) exchange rates and high real exchange rate volatility
have been associated with a muted response to trade liberalisation and other reform measures inLDCs;
• There are strong linkages between trade liberalisation and domestic reform.  Consequently, a
domestic programme of economic reform is needed to underpin trade liberalisation.  Trade
openness creates efficiencies and, therefore, incentives (and pressures) for policy makers to
pursue virtuous policies ("either because they face the threat of capital flight or because they have
found themselves in international agreements, implicit or explicit that provide a check on their
policy");
• A viable banking system is a key companion policy to facilitate the processing of export receipts,
import payments and provision of credit;
• An efficient tax system is critical.  Such a system should ensure equity and effective coverage,
and shift taxation away from international trade flows to consumption and value-added.
• Regulatory reform is necessary to allow trade liberalisation to be translated into trade openness;
• Competition policy is equally necessary in all countries, including developing and least-developed
countries.  It will prevent firms from erecting private barriers where governments have sought to
eliminate barriers, and to ensure that the benefits of freer trade are not "captured" by fewmonopolists or firms;
• Although necessary, no one size fits all.  Flexibility in competition policy is useful to ensure that
it is consistent with the general environment in which it is to be implemented;
• Institutional weaknesses pose significant challenges for LDCs.  Such institutional weaknesses
lead to an effective tax on exports and discourage investment in the export sector.  For instance,there is a virtual absence of effective duty drawback schemes in LDCs, which is coupled to very
high tariffs on imported intermediate and capital goods.  LDCs' exporters, therefore, pay an
inflated price for imports on capital goods, and are not able to drawback the taxes which they pay
on the imported products when they export.  All countries use this and it is perfectly WTOconsistent;
• One clear lesson is that a comprehensive approach is required towards trade and development.
Under the GATT, the attempt was to "force" development into the multilateral trading system,
through the Special and Differential Treatment provisions,  However, now the challenge is to
"mainstream" trade and the trading system into the development process;
• Mainstreaming needs a policy framework.  Trade re form has to be mainstreamed into an overall
development policy.  The mainstreaming process involves several interrelated approaches.  For
instance, it needs that two distinct cultures are reconciled namely, trade culture (which is legalistic
and highly centralised) and development culture (which is decentralised, demand driven, and
based on a country-owned process);WT/LDC/SWG/IF/15
Page 18
• There is a good case for a new Round of Multilateral Trade Negotiations.  The next Trade Round
must take account of the circumstances and the development priorities of LDCs and addressissues of importance to them, including, but not limited to, the timing and sequencing of trade
reforms, complementarity with other policy and regulatory reforms, and support implementation
through enhanced trade policy surveillance;
• According to one view a new Round will not solv e all the problems of developing and least
developed countries, and that there was no certainty in predicting the results that would emerge
from a new trade round.  According to another view, the failure to launch a new trade round
would be worse, with only little further improvements in LDCs’ preferential market access.  The
reality of the trading system is that it works better in a negotiating mode, with time limits, rather
than in the “business-as-usual mode”;
• Enhanced trade policy surveillance trade-related support and capacity-building will support
implementation more effectively than is presently the case in committee oriented WTO work.
The Trade Policy Review Mechanism can be used to assist countries to better understand their
obligations, and also to assist with the process of mainstreaming trade into development plans and
poverty reduction strategies.  The relevance of trade policy reviews could be improved with the
increased frequency;
• The historical evidence unambiguously shows that countries that pursue open trade policies, with
sound macroeconomic policies and structural reforms, to make them more competitive do better.A significant part of the solutions lies in the LDCs themselves.
• LDCs have taken significant steps in autonomous liberalisation, particularly in the '90s.  They
have reduced average tariffs from 45% in the late '80s to approximately 20% currently.  There is
scope for improvement.  Simpler and more transparent border measures are better.  For instance,
uniform tariffs are better than a "staggered" system of tariffs by sector or by product; and,
• Countries should work to improve market access opportunities for LDCs.  In this regard,
significant and concrete improvements have been made particularly with regard to improvements
in preferential market access.  However, further significant improvements, across the board (i.e.
beyond the areas of LDCs traditional exports), wi ll be achieved within the framework of a new
Round of multilateral trade negotiations.WT/LDC/SWG/IF/15
Page 19
2. PANEL B: MAINSTREAMING: CONCEPTS, APPROACHES, IMPLEMENTATION
AND FUNDING
30. This panel focused on clarifying the concept and value of mainstreaming and setting-out the
mechanics of how a trade agenda and trade priority areas of action are actually integrated into
development plans and poverty reduction strategies.  The question of how mainstream is undertakenwas addressed.  The different approaches and options to mainstreaming were discussed.  How do key
economic domestic ministries and departments coordinate and seek an integrated approach that
includes complementary market reforms, supporting policies and institutions?  Who arbitrates
domestic discussions to establish a national economic consensus that is integrated and balanced, and
to which trade priority areas of action are integral?  What are the main approaches, and which are the
best practices?  Is external policy support (intervention) by multilateral Agencies necessary to achieve
the mainstreaming of a trade integration agenda, as a vital public good, into development plans andpoverty reduction strategies?  Is there a cost to mainstreaming, how is the cost calculated, and who
pays for costs of mainstreaming?
31. Lead Presentations were made by;
(i) Mr. Ataman Aksoy, Economic Advisor, Economic Policy, Development Prospects
Group, World Bank; and,
(ii) Mr. Graham Chipande, Senior Economist, UNDP, the Gambia.
32. Following the lead presentations, three panellists intervened:
(i) Mr. John Cuddy, Director, Intern ational Trade Division, UNCTAD
(ii) Mr. Grant Taplin, Director, IMF Office, Geneva, and,
(iii) Mr. Ignacio Garcio Bercero, Trad e Division, European Commission.
Key Issues
• Mainstreaming trade into overall national development plans and poverty reduction strategies has
arisen as an issue of urgent necessity because, although trade liberalization and reform are
necessary for generating resources and growth for poverty reduction, they may not work unlessthey receive support from complementary policy areas (macroeconomic, regulatory and structural
policies);
• An integrated reform package is essential because there are strong linkages amongst policy areas.
For instance, inappropriate fiscal, monetary and exchange rate policies will adversely impact ontrade development.  Although trade generates growth for poverty reduction and development,
sound macroeconomic policies provide the foundation for all reforms;
• Trade liberalization and reform do not work in isolation.  Mainstreaming is important for several
reasons because, for instance, it is not Trade Ministries that have the budget for developmentcooperation, but Development Ministries and multilateral organizations;
• LDCs and developing countries require a positive strategy for trade integration to fully benefit
from the multilateral trading system;WT/LDC/SWG/IF/15
Page 20
• There are several core issues  in mainstreaming.  These include sequencing  of reforms and
national policy trade-offs  (such as between tariff reductions and ability to provide exporters with
duty drawbacks because of immediate revenue consid erations).  Furthermore, there is also the
issue of the choice  confronting LDCs in determining priorities of companion policies, as well as
the important issue of country specificity : the same approach may not be applicable to all LDCs.
Ownership and domestic coordination  amongst key national economic ministries is also an
important issue.  Coordination is entailed in the relationship between development partners
(donors and agencies) and beneficiary LDCs, and could be given effect through joint
programming and joint appraisals.  Finally, financing is critical in mainstreaming efforts, in the
absence of which efforts to mainstream dissipate;
• Mainstreaming trade has to be implemented systemically.  Long-term horizons are needed and
there will be no quick fixes. Although trade is necessary in generating sustainable resources forgrowth and poverty reduction, LDCs also have many other competing priorities, and sometimes
would like to focus on direct interventions for po verty reduction in such areas as education, the
social safety net, health issues, etc.  At the same time, it is clear that trade generates resources,
which are necessary for growth, and which, mediated by correct policies, alleviate poverty and
facilitate development;
• Mainstreaming trade is also not simply about the use of consultants to write reports (trade
integration studies).  It involves much more, which is essentially ownership by the LDC, in order
to ensure that trade priority areas of action are systemically integrated into national developmentplans and strategies for poverty reduction;
• The IF is a vital mechanism for assisting LDCs wi th mainstreaming trade priority areas of action
into national development plans, as has been the case in The Gambia, where trade accounts for
75% of the GDP.  An one of the several advantages of the IF is its value as a mechanism for
systematic and focused intervention by the six core agencies, in the LDCs, to assist them with
trade integration;
• Development partners (donors, LDCs and multilateral agencies) should guard against the
proliferation of strategy papers, policy frameworks, programmes and projects with technicalassistance.  Improved coordination is required;
• The regional setting is important as a medium for mainstreaming trade and seeking to expand the
market access opportunities for LDCs;
• To secure the gains from mainstreaming trade, LDCs require access to the markets of developed
and high income developing countries;
• Although there is more work to be done, LDCs' trade regimes were significantly liberalized in
developing countries and LDCs in the 1980s and 1990s, through tariff reduction and reduction
also in non-tariff measures.  This resulted in accelerated growth in developing and least-
developed countries in the period;
• Although there are LDCs that still have distorted trade regimes, such distorted trade regimes are
not the most severe challenges that LDCs face in  seeking to achieve growth and integration.  The
most severe constraints that LDCs now face, and have to overcome, lie at the policy and
institutional level in order to enhance supply and ensure appropriate supply responses;
• Market access has become far more important for LDCs today than they were a decade ago,
because with autonomous liberalization by LDCs, they are no longer taxing their exports as theyWT/LDC/SWG/IF/15
Page 21
did a decade ago.  Demand constraints from devel oped and high income developing countries are
far more significant than they were 10 to 15 years ago;
• LDCs' reform will continue, including enhancing supply responses.  However, LDCs' efforts need
to be matched by improved market access for LDCs' exports, particularly in the agriculturalsector.WT/LDC/SWG/IF/15
Page 22
3. PANEL C: DOMESTIC CONSTITUENCY FOR MAINSTREAMING: EXCHANCE
AND REVIEW OF COUNTRY EXPERIENCES.
33. This panel addressed specific country experien ces.  A major challenge in the implementation
of policy, particularly for public goods, is how to build a viable domestic constituency, necessary for
advocacy and policy sustainability.  Public goods involve adjustment costs, and the benefits whilecertain and meaningful, may not be immediate, but medium to long-term.  Furthermore, there are
competing national economic choices, involving decisions on national expenditure, from the
immediate and urgent to avert disasters, to th e medium and long-term for sustained growth and
development.
34. The panel focussed on building domestic constituency for mainstreaming and ensuring that a
trade integration agenda was part of development plans and poverty reduction strategies.  Several
developing countries, particularly in Asia, have been successful in establishing trade priority areas ofaction as part of national development plans.  The presentation and the contributions by panellists
focussed on country experiences, both from a governmental point of view, as well as from the
perspective of consultants who assisted governments in their efforts to build a domestic constituency.
35. Lead presentations were made by:
(i) Dr. Ravindra Ratnayake, Chief of the Trade Policy Section of the Economic and
Social Commission for Asia and the Pacific (ESCAP); and,
(ii) Mr Michel de la Taille, UNDP Resident Representative, Mauritania.
36. Following the lead presentations, five panellists intervened,  The panellists were;
(i) Mr Steve Hadley, Director, Office  of Emerging Markets, USAID,
(ii) Mr James Fox, USAID consultant for Zambia’s Trade Sector Round Table,
(iii) Mr Musokotwane, Zambia’s PRSP Coordinator,
(iv) Mr Maxwell Mkwezalamba, Principal Secretary, Ministry of Finance and Economic
Planning, Malawi, and,
(v) H.E. Mr. Srinivasan Narayanan, Ambassador Permanent Representative of India to
the WTO, Geneva.
Key Issues
Common themes were drawn from the various country experiences. Countries discussed were
Zambia, Mauritania, Malawi, and the Asia-Pacific region§§.
• Trade is a powerful engine for gr owth for some of the developing countries in the Asia Pacific
region;
• The governments of LDCs in the Asian region need to make trade an engine for growth by
introducing sound economic policies, including appropriate trade policies, and to incorporate
these policies into development plans or poverty reduction strategies;
                                                     
§§ For individual country experiences, see papers annexed papersWT/LDC/SWG/IF/15
Page 23
• During the last decade, the LDCs in the Asia-Pacific region have managed to make some
significant progress in terms of liberalising their trade regimes;
• In order to benefit from the trade policies, a clear commitment to the implementation of such
policies is necessary;
• Regional integration is very important.  Regional integration, regional agreements and other
regional initiatives should be taken as building blocks of a broader trade liberalisation strategy;
• Successful implementation of policies and plans depends largely on the capacity of human
resources that LDCs lack;
• The international community can assist by ensuri ng the full implementation of the IF, by giving
duty-free access to products from LDCs and by taking a fast track approach to LDCs' accession to
the WTO, particularly since only 4 out of the 13 LDCs in the Asia-Pacific region are WTO
Members;
• It is important to establish a dialogue between trade ministries and other ministries, particularly
the finance ministries, as well as between gove rnment as a whole and the private sector, the
academia and other interested parties.  It is also important that bilateral donors compliment and
supplement the role of the multilateral donors;
• The IF needs to be broadened to include all development-related issues;
• Country ownership of the PRSP process is critical;
• While trade liberalisation is generally believed to promote economic growth, there is no finding
that trade, per se , leads to poverty alleviation and greater employment opportunities;
• There is also a need to mainstream development into trade.  When negotiating agreements, it
should be ensured that the agreements do not go against the development interests of the country.
4. PANEL D: GLOBAL DIMENSIONS AND CORE ISSUES IN MAINSTREAMING.
37. This session aimed at identifying the core issu es related to the integration of trade priority
areas of action in national development plans and poverty reduction strategies.  There is a global as
well as a domestic dimension to the core issues in  mainstreaming.  The issues and their importance
may vary from country to country.  The results of the panel aimed at assisting in the improvement of
the critical issues that required reflection in a trade integration agenda for development and povertyreduction.
38. Lead presentations were made by:
(i) Mr Uri Dadush, Director, Economic Policy  and Development Prospects Group, World
Bank; and
(ii) Ms Susan Prowse, Senior Economic Adviser, Department for International
Development, UK.
39. Following the lead presentations, six panellists intervened.  The panellists were;
(i) Sarath Rajapatirana, American Enterprise Institute, Washington D.C.;WT/LDC/SWG/IF/15
Page 24
(ii) Michael A. Samuels, President, Samuels International Associates, Washington D.C.;
(iii) Gretchen Stanton, Senior Counsellor, Ag riculture and Commodities Division, WTO;
(iv) Charles Gore, Senior Economic Affairs Officer, Office of the Special Coordinator for
the LDCs, Landlocked and Island Developing Countries, UNCTAD;
(v) MasahiroYamashita, Senior Advisor, Japan International Cooperation Agency
(JICA); and
(vi) Mr. Mohammed Ould Lemrabott, Conseiller, Mauritania.
Key issues
• A global agenda is very important in the mainstreaming and integration issues, although the main
impediments to integration in LDCs are local;
• LDCs have constraints with respect to, inter alia , their institutional framework and their capacity;
• There is a need to approach the integration of LDCs from the global perspective, not only from
the trade angle but also by considering broader issues of finance, aid and other creative solutions;
• There are trends in the current global system that help to address the issues that are faced at the
global level of mainstreaming.  These include:
• Developing countries have much greater weight in the world economy and the world
trading system than they did ten to twenty years ago;
• Trade opening in developing countries has progressed over the last twenty years.  The
average tariff has been reduced by half from 32% in the first half of the 1980s to 15.6% inthe second half of the 1990s;
• Despite the progress, trade barriers in developing countries remain much higher than
those in industrial countries.  This imposes a cost on their own welfare and on export
opportunities to each other;
• While the developing countries have been integrating rapidly into the global system, the
poorest countries among them have been falling behind.  The share of LDCs in the world
trade in 1997 was 0.4%, down by half from 1980.  In addition, LDCs are particularly
disadvantaged by lack of communication facilities;
• There is disappointment among many developing countries over the outcomes of the
Uruguay Round.
• The market access agenda remains particularly important for LDCs.  The Eus' "Everything but
Arms" initiative as well as the USs' African Growth and Opportunity Act are a good start.  Other
initiatives are being considered at the highest level with regard to market access for LDCs;
• LDCs face various barriers in trading freely in global markets. An example of such barriers is
product standards.  Assistance should be given to developing countries to enable them to developand strengthen their capacity to meet standards and to participate more fully in international
standard settings;WT/LDC/SWG/IF/15
Page 25
• There is a tremendous amount to be done at the global agenda level with regard to the new issues
of world trade and helping LDCs deal with the regulatory and other behind-the-border indications
of the new trade agenda;
• A solution to these issues will have to be approached from a much broader development
perspective;
• Promotion of a trade agenda within developing countries is vital to achieve the common objective
of reducing world poverty by half by the year 2015;
• There is a strong link between trade and poverty alleviation.  Trade liberalisation and openness
have a beneficial impact on economic growth;
• It is necessary to recognise that WTO Members are at different stages of development.  New
WTO rules must reflect a country’s implementation capacity and there is a need to strengthen thecapacity of developing countries to participate effectively in the WTO;
• The integrated approach by the WTO, the World Bank and the IMF needs strengthening.  It
should deal with not only the questions on trade but also of funding and monetary issues;
• The five elements, which were viewed are central to mainstreaming trade are:
- Trade reform by developing countries;
- Trade reform under a pro-poor agenda;
- Strengthening the capacity to trade;
- Market access issues; and
- Impediments and benefits of the WTO global rule-making for developing countries.
5. PANEL E: COORDINATION OF THE DELIVERY OF TRADE-RELATED
TECHNICAL ASSISTANCE AMONG BILATERAL AND MULTILATERAL
DONORS.
40. Panel E focussed on the various initiatives for the delivery of trade-related technical
assistance, the development vehicles within which they operated, and the urgent need for improved
coordination.  There was particular focus on the new arrangements for the enhanced implementation
of the IF within the development vehicle of the PRSPs.
41. LDCs, as beneficiaries of trade-related technical assistance delivered by bilateral donors and
multilateral agencies, have expressed frustration at the multiplicity of vertical initiatives with littlehorizontal coordination.  Improved coordination is needed amongst bilateral donors and multilateral
agencies.  The IF has become a reliable channel of communication amongst the six core Agencies and
has significantly enhanced coordination and trust amongst the agencies.
42. This panel also focused on on-going activitie s within the Development Assistance Committee
(DAC) of the OECD.  The DAC is strongly committed to improving coordination with multilateralagencies.  As a forum for bilateral aid agencies to share experiences and good practices, the DAC
increasingly recognises the importance of trade for development and poverty reduction, and the need
to participate actively in international efforts to  help build the human and institutional capacities of
developing countries to trade.WT/LDC/SWG/IF/15
Page 26
43. The DAC is currently in the process of prepar ing a set of guidelines in this area.  The
guidelines aim to foster effective partnerships between developed and developing countries.  They
also aim to promote synergies between the aid and trade communities, on the one hand, and between
the bilateral and multilateral donor communities on the other hand, particularly with regard to the
effective implementation of the IF.
44. The lead presentations were made by:
(i) Mr. Richard Carey, Director, DAC/OECD Secretariat; and
(ii) Mr. Chiedu Osakwe, Head, Secretariat Working Group on the IF and LDCs, WTO.
45. Following the lead presentations, six panellists intervened.  The panellists were:
(i) Mr. Martin Dagata, Director, Technical Assistance, ITC;
(ii) Mr. Rénald Clérismé, Minister Counsellor, Permanent Mission of Haiti, Geneva;
(iii) Mr. Marcel Namfua, Interregional Adviser, Office of the Special Coordinator for the
LDCs, Landlocked and Island De veloping Countries, UNCTAD;
(iv) Mr. Peter Tulloch, Director, Development Division, WTO;
(v) Mr Georges Chapelier, Principal Technical Advisor, Management Development and
Governance Division, UNDP; and
(vi) Mr Jean-Maurice Leger, Director, Technical Cooperation Division, WTO.
Key issues
• There is renewed energy in the international comm unity to push strongly the development agenda,
the aid agenda, the debt agenda and the trade agenda;
• There is a need for guidelines to raise the leve l of priority and commitment to trade capacity-
building in both developing countries and among the donor community;
• These guidelines will assist in getting things moving on the ground in systematic, sustainable and
dynamic ways.  The OECD guidelines, to be endorsed by OECD Ministers in May, provide the
donor community and their development partners with a common reference point and will be animportant instrument of coordination;
• Trade development is the key to development, to dynamic growth and, in the long run, poverty
alleviation;
• There has been too much technical cooperation for too little sustainable capacity-building;
• Financial support does not equal capacity-building.  Financial support can facilitate capacity-
building, but there can be a lot of financial suppor t with little capacity-building.  The essence of
capacity-building is participation and ownership of the recipient country;
• Local ownership is the key to country level ownership.  The developing country itself must bring
the donors together into a common effort.  Bilateral and multilateral donors at the country level
can assist countries to get people together to identify agenda;WT/LDC/SWG/IF/15
Page 27
• Technical assistance is important for a number of reasons.  It is important for capacity building –
capacity for human development, capacity for infrastructural development and capacity todevelop very specialised expertise.  However, th ere is the risk of a moral hazard which needs to
be avoided;
• The new IF will consist of a trust fund and will operate on the basis of a pilot scheme;
• Coordination between donors can be enhanced by taking stock of who is doing what at the
country level, what needs are not being adequately addressed and what synergies can be
exploited;
• The Joint Integrated Technical Assistance Pr ogram (JITAP) initiative which combines the
expertise and knowledge of three agencies (ITC, UNCTAD and WTO) to deliver trade-relatedtechnical assistance, is the first inter-agency effort towards coordination.  In implementing and
structuring the Integrated Framework, lessons should be drawn from JITAP;
• There is a need to build upon and broaden the existing coordination platform provided by the
agencies and the prospective donors to the proposed IF Trust Fund to include other bilateral
donors and other agencies in the field that are engaged in the delivery of trade-related technicalassistance;
• The need for technical assistance for capacity building in the institutional and human resources, as
well as the need to mobilise resources and coordinate these efforts, has become more apparent and
increasingly expressed;
• Multi-donor funding of specific programs reflects the sharing of common objectives and purposes
among the donors and beneficiaries, and therefore, improves the impact and effectiveness in the
use of technical assistance resources in beneficiary countries;
• The IF Trust Fund, for example, provides the possibility for consensus on the goals and objectives
of trade-related technical assistance programs between donors, beneficiary LDCs and multilateralagencies, thus reducing the risk of duplication;
• There is also a need for South – South coordination since many developing countries are part of a
regional grouping; and,
• Coordination of donors, and of governments cannot be limited to trade alone.  Multiple and
coordinated initiatives must be taken in the wider context.  Coordination at country level is also
crucial.WT/LDC/SWG/IF/15
Page 28
A. ANNEXES
ANNEX I
I. MESSAGE FROM MIKE MOORE, DIRECTOR GENERAL, WTO
On behalf of my colleague Heads of Agencies, at the IMF, ITC, UNCTAD, UNDP, and the
World Bank, I am pleased that you are here participating in this first ever, joint core IF agency
seminar focused on, "The Policy Relevance of Integrating Trade into Country Development Strategies
– Perspectives of the Least-Developed Countries" , 29-30 January 2001.  The ultimate purposes of
trade reform and liberalization are to increase national incomes and employment, alleviate poverty
and promote economic development.  Trade has an important role to play, but it requires companion
policies for it to contribute to development.  No single agency, and no single policy can completely
address the needs of Least-Developed Countries (LDCs).
The Integrated Framework for Trade-Related Technical Assistance to Least-Developed
Countries (LDCs) is the only platform available to  the core multilateral economic institutions today
for coordinating assistance to LDCs in support of thei r efforts to integrate into the multilateral trading
system and the global economy.  The benefits of integration are no longer an issue for debate.  What
is, however, under discussion is how to involve all stakeholders and oversee the provision of supportfor the LDCs in their efforts to  grow faster and reduce poverty.
On 6 July 2000, the six core Agencies decided to take various measures to improve the
implementation of the Integrated Framework, and to make it a more effective tool for the delivery of
trade-related technical assistance to LDCs.  We decided to situate the IF within the Poverty Reduction
Strategy Papers Process (PRSPs), the main development vehicle, coordinated by the World Bank.  Iam convinced, with other Heads of Agencies, that placing the IF within the wider context of an
overall development strategy is the best solution for optimizing the potential and the benefits of the
IF.  Trade reform and liberalization have to be set within a comprehensive framework for poverty
reduction and economic development.
The contributions of the IF, so far, have been modest.  Nevertheless, improvements are
underway to strengthen the IF and to make it a more effective mechanism for assisting the trade
development of LDCs.  The IF has provided the platform for coordinating the work of our agencies
and provides the basis for the delivery of high quality trade-related technical assistance to and support
for LDCs.  In my view, the IF is a necessary instrument for assisting LDCs in their search to draw on
the benefits of membership of the multilateral trading system.  Furthermore, it is now more evident
than ever that additional measures are required for assisting the integration efforts of LDCs, and that
this can only be meaningfully achieved with the launch of a broad and balanced set of multilateraltrade negotiations, focused on a development agenda.  The launch of a new round of trade
negotiations is the best insurance against protectionism, for comprehensively addressing real and
perceived systemic imbalances, and for proceeding rapidly with an agenda for development and
poverty reduction.
I hope that the outcomes from this seminar will significantly contribute to providing
meaningful assistance to LDCs, and will ensure that trade priority areas of action are firmly set within
the wider context of development plans and national strategies for poverty reduction.  In this regard, I
believe that the papers presented at this seminar as well as the discussions will make a signficant
contribution to our common objective to support the LDCs to integrate more effectively into the
global economy and draw on the benefits of an open, rules-based trading system.WT/LDC/SWG/IF/15
Page 29
ANNEX II
II. OPENING STATEMENTS
Welcoming Remarks by Mr. Mike Moore, Director-General, WTO
On behalf of the six core agencies responsible for the Integrated Framework: the IMF, ITC,
UNCTAD, UNDP, the World Bank and the WTO, I want to welcome you to this important seminar.
Three points need to be highlighted at the very beginning.  First  the Integrated Framework is
the first-ever attempt at inter-agency cooperation amongst our six economic institutions.  So it is a test
of the institutions themselves.  There are enormous challenges because of the different mandates and
cultures but we have no choice.  I believe we institutions are on the line here as well so I intend to do
everything I can – I know the heads of the other agencies and staff are committed to ensure that thisworks if it succeeds here it will succeed elsewhere and it has to succeed if we are to convince our
partners the donors and other friends to improve and make successful this partnership.
The second point, requiring highlight, is the purpose of this seminar, that is the urgent need to
ensure that trade priority areas of action are integrated into overall national plans for development and
strategies for poverty reduction.  Trade liberalization and reform are indispensable for rapid growth,which generates the essential resources for poverty alleviation and development.  Although necessary,
we all know that trade reform and liberalization on their own are not enough.  They only constitute
part of the complex jigsaw for generating essential resources for the increase of national incomes
wealth, prosperity and poverty alleviation.  We all know there are other issues at stake whether it be
debt repayment, whether it be capacity-building, whether it be good governance or whatever, but thisis an area we have a responsibility for and I believe we can do something about it.  Over many years,
and far too often, trade liberalization and reform have been pursued as stand-alone policies.  They
cannot work and have never worked as stand-alone policies or measures.  Although openness to trade
is associated with rapid economic growth, and alt hough countries that trade grow much faster than
those that do not, yet, for trade liberalization to be the motor for rapid growth, companion andmutually supportive policies are essential requirements.  This is why we need to construct a bridge
that connects the three communities: the trade, the development and finance communities.  If we
cannot together build this bridge, and if the three communities cannot initiate and sustain a dialogue,
focused on comprehensive strategies in which trade priority areas of action are integral, then our
efforts and the outcomes will be second best and that is not good enough for anyone.  So that is why
we are here today.  And that is why we have with  us, not only the usual representation of the trade
community in Geneva, but also the representatives from the finance and development communities,comprising LDCs, donors and agencies, and including both the Geneva-based and the capital-based
officials.  I believe that this provides a great opport unity for all those who have  been involved in trade
policy making as well as trade-related technical assistance from different angles, to discuss and
brainstorm as to how the trade agenda can be  effectively incorporated into LDCs' national
development strategies.
This leads me to a third point namely, that is the urgent necessity for a wider set of
multilateral trade negotiations – a new Round.  And I report to you that the mandated negotiations in
agriculture and services are underway.  Special sessions of the General Council have been held
frequently to address the implementation issues, raised by Members.  In all these areas we have made
some progress.  Never enough.  Yet it's clear that imbalances, perceived and real, remain, and muchmore rapid progress is required.  If you accept that status quo is not good enough and that injustice
still remains, then, in my view the best way to change the status quo which is only yesterday's
compromise is to start a negotiation where we can address those points in a wider agenda.  It has
always been my view that it is always the smallest guy, and the more vulnerable person who needs toWT/LDC/SWG/IF/15
Page 30
get into the ring and to negotiate.  And I look forward to helping build the capacity so when that
negotiation begins all friends feel that they can with confidence represent the legitimate needs of their
country.
There are several important elements to the new arrangements for improving the
implementation of the Integrated Framework.  The notion of "mainstreaming" is probably the singlemost important feature of the new IF arrangements.  The six agencies strongly believe that in order for
trade policy and trade-related technical assistance needs to receive full consideration in national
deliberations on development strategies, the IF process needs to be mainstreamed.  The best
framework for this mainstreaming process is the development vehicle of the Poverty Reduction
Strategy Papers process, which has been developed by the World Bank and the IMF as a means for
articulating national economic priorities as a basis for dialogue within domestic constituencies and
with the international community.  The IF, mainstream ed into the PRSPs, would mean that, first, the
role of trade is firmly situated within the coherent national policy context of the country concerned;
and, second, that the country's trade-related technical assistance needs are better identified, prioritized
and sequenced, on the basis of policy diagnosis, and therefore stand a much better chance of being
financed by donors and agencies.
One of the assets of the Integrated Framework is the complementarity of competence and
mandates of the six core agencies.  The new distribution of responsibilities amongst the agencies can
now ensure a better a more effective coordination in the delivery of trade-related technical assistance.
The difficulties and challenges that confront LDCs are complex and diverse.  LDCs cannot be
expected to tackle these problems on their own, although they need to drive and own the process of
addressing these challenges. Equally, no single agency, on its own, can respond appropriately to theneeds of the LDCs.  That is why the Integrated Framework is so important.
I am pleased to report to you that, since the 6 July meeting of Heads of Agencies, the donor
community has risen to meet the challenge of providing concrete support for the effective
implementation of the IF, as a mechanism for the de livery of trade-related technical assistance within
a coherent policy framework for the LDCs.  This concrete support has been demonstrated in threeareas.  First, the strong commitment of donors is reflected in their expressed willingness to participate
in the management structure of the new IF.  Second, donors have signalled their clear intentions to
commit resources to the Integrated Framework Trust Fund, which is not only signficant because it
transforms the IF into a funded mandate, but also because it provides real resources for assisting the
vital process of mainstreaming a trade integration agenda into the poverty reduction strategies of
LDCs.  Third, and in addition to signalling commitments to an IF Trust Fund, several donors are
taking the lead, in the field, in some LDCs, and providing them with direct support.  So at thismoment in time, we have a rare opportunity to transform the Integrated Framework into an effective
instrument of support for the LDCs.  We must not miss this opportunity.  Agencies, donors, LDCs; we
all have a critical role to play.  We cannot succeed with each playing its role on its own.  The new IF
will begin on the basis of a pilot scheme.  On your behalf, I want to express my profound gratitude
and respect and thanks to the donor countries.
I am confident that once positive results are attained in two or three LDCs, in the next few
months, hopefully by the Third UN Conference for LDCs, Brussels, 14-20 next May, then on the
strength of that the scheme will be extended to other LDCs.  I believe that all our efforts on the
Integrated Framework will and should result and become one of the "deliverables" for the conference,
but I need to stress over and again, that we need to and are obliged to work together and inpartnership.  This concrete "deliverable", another concrete deliverable by the UN Conference is that
we will see trade mainstreamed and turned into a development vehicle for the poverty reduction
strategies in these pilot countries; and, that trade-related technical assistance can be delivered to those
countries.  Understanding where we are and what requires urgent accomplishment is one of the
objectives of this seminar.WT/LDC/SWG/IF/15
Page 31
Market Access, this is a good time for updating you on recent developments on market access
for LDCs.  There have been several significant improvements.  These developments follow on the
consultations that I initiated, as part of our confidence-building package in January, last year.   So I
can report to you that trading partners, both developed, transition and developing, have taken steps,
towards "duty-free and quota-free treatment" for LDCs.  Based on my consultations, I reported toGeneral Council in May last year that 27 Members have taken or proposed further market access
opportunities for LDC exporters.  I addressed letters to Members, and have invited notifications of
these opportunities.
Following on my letter and on-going consultations that I have had, notifications and positive
announcements have since been made to enhance preferential access for LDC exports.  Many of our
Members have done so.  Canada, New Zealand and Norway, have notified measures taken, while
Japan, EC, and the US have announced or proposed new measures that will significantly improve
market access opportunities for LDCs.  Let me briefly outline these for you:
• Canada, effective 1 September 2000.  They added a further 570 tariff lines to the list of goods
from LDCs eligible for duty-free treatment.  Now about 90 percent of all LDC imports will now
receive duty-free treatment;
• New Zealand, in November 2000, notified its decisi on to offer duty and quota-free access to all
imports from LDCs effective from 1 July this year.
• Norway in November 2000, notified its GSP-system that accords duty-free treatment to all
industrial and agricultural imports from LDCs, w ith the exception of flour, grains and feeding
stuffs, where a preferential margin of 30 percent within indicative tariff ceilings is given;
• The European Commission is continuing to pursue its proposal for duty-free, quota-free market
access for all LDCs exports (except arms).  A transition period of between 6-9 years is being
considered for sugar, rice and bananas.
• Japan in December 2000, announced its "99 per cent - initiative on Industrial Tariffs".  When
implemented in April 2001, the coverage of duty and quota-free treatment for LDC industrial
product exports will rise from 94 to 99 per cent and will include textile and clothing exportedfrom LDCs;
• The US, has further elaborated on the African Growth and Opportunity Act adopted in May last
year.  34 Sub-Saharan countries have been designated as beneficiaries under this Act in October
2000, and they will be able to avail themselves of new GSP benefits for 1,835 tariff lines as from
December last year.  So I can report that there have been  significant and positive improvements.  I
know that it is never enough but we are committed to working harder with our Members to see
what more we can do. Let me conclude by saying that assisting and accelerating the integration of
LDCs into the multilateral trading system and the global economy requires effective measures at
the level of improved market access and, at the level of meaningful trade-related technical
assistance within this coherent policy framework.  At both levels, it is urgent and vital that trade
liberalization and reform are firmly located within national development and poverty reductionstrategies.  I have always believed that a  new Round of Trade Negotiations will enable us to do
even better and assist us all in building on our current modest achievements.
Some excellent papers have been contributed and have been circulated to assist your
discussions at this seminar.  And on behalf of th e six core Agencies, I wish to you all a successful
seminar and if I can conclude by saying to the agencies that are here I appreciate the assistance in thework and the comradeship and solidarity we ar e showing with each othe r and I look forward to
reporting tot he other Heads of Agencies about how th is seminar is another step in getting us to theWT/LDC/SWG/IF/15
Page 32
goal we all want.  To thank you very much for your attendance and thank you to our staff here at the
WTO.
Thank you.
H.E. Mr. M.D. Abdul Jalil, Minister of Commerce, Bangladesh
I am delighted to be able to participat e in this Seminar on "Policy Relevance of
Mainstreaming Trade into Country Development Strategies:  Perspectives of LDCs".
The six intergovernmental organizations have joined in its arrangements reflects their
commitment to the cause of the LDCs.  I thank th em all.  The Integrated Framework for the LDCs
arose from a decision adopted by the Members of th e WTO in Singapore in 1996.  At that time, it was
felt that the trade-related capacity of the LDCs need to be developed.  I believe the desire to assist theLDCs is still as strong as ever.
Mr. Mike Moore's presence here symbolises the WTO's and his personal commitment to the
cause of helping the LDCs he has been vocal in his support to the need to provide market access to the
LDCs, apart from other forms of assistance.  Some countries have already integrated that they are
seriously considering providing market access for our products.  The EU, in particular has tabled agood proposal that covers all products of LDC, except arms.  I do hope that with the WTO's support,
we sill soon get duty-free an quota-free access for all our LDC products in the EU and in other
countries.
We live in an age of rapid change.  Much of this change has been brought about by the rapid
transformation in information and communication technology over the last two decades.  We are nowable to do what was only dreamt of a few years back.  And, today, we have new enthusiasm among
our entrepreneurs and private sector representatives.  In fact, today's heroes are not statesmen, soldiers
and philosophers but entrepreneurs such as Bill Gates.  We clearly have the means and the ability to
make a difference on this planet.
The fundamental issue for LDCs is to eliminate poverty, hunger, deprivation, malnutrition,
and disease.  In some cases, we face new challeng es, such as with HIV or AIDS, that were unknown
till recently.  In this era of globalization the plight and sufferings of LDCs are increasing as they face
growing marginalization in the world economy.  Trade is generally considered as an essential building
block of globalization.  Yet, protesters at Seattle were able to halt this very important aspect of
globalization.  Now, many ask if there is political will in the developed, industrialized world to make
the concessions that can move this process forwar d.  In the field of international finance flows,
governments have belatedly realized that they still have considerable powers,  The manner in whichMalaysia was able to recover from the East Asian financial crisis has a great deal to do with the
policies they adopted, in defiance of the prevalent prescriptions.  In some parts of the world, advocacy
of free market principles do not include a surrender of some basic concepts of a "welfare state".  In
international negotiations, whether in the field of environment, in genetically modified foods or in
cultural affairs, science and economics now take a back seat to politics.
Ignoring the political dimensions of globalization has its costs.  What risks we are able to take
will depend on the compact that we are able to build with our development partners.  We will open up
our markets, and remove barriers, as we have been doing, but are the developed countries prepared to
reciprocate?  We require finance that is available in the developed countries' markets;  but, we can
access such funds without the prospect of burning our fingers in the process?  We know that thegrowing "digital divide" will further marginalize most of our developing countries.  The question is:
are the developed countries prepared to work with is to bridge this gap?  These are among the issuesWT/LDC/SWG/IF/15
Page 33
we will face in the next decade of globalization.  It is my view that this decade will pose a challenge
for us, more in politics than in science and economics.
The experience of countries that have progressed on the path to economic development
clearly demonstrates the importance of export-led industrialization and growth.  The days of self-
sufficiency and import substitution strategies are over.  External trade enables countries to meet theirshortage of foreign exchange, technology needs and ma nagement expertise.  All these are vital for the
LDCs.  In many ways, trade may even occasionally substitute for aid in the development process.
The rule-based trading regime has come at a time when the LDCs are poised for development
based on trade.  Countries that are more developed did not face the obstacles we now face in trade.
The result has been a growing marginalization of the LDCs.  Almost one-tenth of the world
population now accounts for less than one per cent of world GNP and less that half of one per cent of
world trade.  We see the new group of supra -States, the multinationals, contributing to more than a
fifth of world trade just by trading among themselves.  Taking advantage of economies of scale,
location, sourcing of inputs, and in pricing, they have begun to dominate markets.  In some cases, they
have begun to dominate markets.  In some cases, they have even followed predatory practices, which
make strong economic sense from their perspectives.  LDC firms are unable to compete, and our legal
and institutional structures are inadequate to enable fair competition.
The role of Governments must be reviewed in this changing scenario.  We must provide the
right environment so that our private sectors can flourish.  State-owned enterprises should be
privatized.  In physical and social infrastructure, the governments in the LDCs would need to continue
to play a leading role until the private sectors can step in.  In helping LDCs governments create the
right environment for the private sector, the international community can play a very important role.
The importance of international finance in the development of LDCs has been repeatedly
emphasized.  Again, the changing world scenario does not provide us much hope.  The OECD reports
that over three hundred billion dollars that moved from the DAC countries to the developing
countries, in 1999, less than 22 per cent was in the form of ODA.  Most of the flows were non-
concessional and from private sources.  The LDCs accounted for barely 4 per cent of the total flows,mostly in ODA.  Only a decade back, the proportion was much better for the LDCs.  While most
developing countries are increasingly relying on pr ivate flows for development, the LDCs are being
deprived of this facility.
The trend of ODA flows to the LDCs over the last few years does not provide hope for
significant increases.  Clearly, our reliance will have to be on private sources of capital.  The LDCs
are making valiant efforts to attract private investment.  However, without the active intervention of
our development partners, our chances of making significant breakthroughs are slim.  Ourdevelopment partners need to encourage their private sector firms to target LDCs, through fiscal and
other incentives, concurrently with the LDC efforts.
Before I leave the arena of finance,  I must me ntion the problem of indebtedness that we face.
The current HIPC programmes have so far not been able to help a substantial number of LDCs.
Unless we can relieve the debt burden of the LDCs, we will not go far with other programmes toassist them.  In Bangladesh, the Government of Prime Minister Sheikh Hasina has emphasized the
role of external trade in economic development.  In  this area, we are encouraging our private sector to
come forward.  Our objective has been to provide the right framework, legal and physical, in which
the private sector can operate in response to demand.  We are also encouraging foreign private
investment.  Our policies are producing good results, with high growth rates and excellent exportperformance.  Much more remains to be done.WT/LDC/SWG/IF/15
Page 34
Conceptually, an Integrated Framework (IF) incorporating the programmes of the six
organizations is a good way forward.  There must be coherence in the activities of the organizations,
in respect to any LDC.  This coherence can be achieved through the IF approach.  The objective
should be to  create capacity in infrastructure, both social and physical.  Thereafter, the private sector
should be allowed full freedom to take advantage of the opportunities, both in trade and in finance.The IF programmes will be judged by what they have achieved.
It is vital that the diagnosis for change be correct, otherwise the programmes we develop will
be flawed.  The latest LDC Report, brought out by UNCTAD, has clearly highlighted the
inadequacies of the current approaches.  There are positive synergies between international policies
towards LDCs in domains of aid, debt reduction, inte rnational trade, and promotion of private capital
flows.  I believe our programmes must take this into account.  As the Minister of Commerce, I
strongly believe it is through international trade that the LDCs will make their way in this world.
I thank the WTO and other collaborating Organizations for organizing this Seminar.  I look
forward to the deliberations of the two days, in the hope that realistic approaches will be found to
assist the LDCs.
H.E. Mr. Jonathan Fried, Senior Assistant Deputy Finance Minister, Canada
All of us share the goal of fostering econom ic growth in a manner consistent with the
sustainable development of the world economy.  This is particularly critical for the least developed
countries, many of whom have not participated in nor benefited from the expansion of the world
economy and trading system over the last few decades.  As you know, the international communityhas endorsed a series of development goals aimed at halving global poverty by the year 2015.
Unfortunately, many LDCs, particularly in Sub-Saharan Africa, are not on track to meet them.
Recognizing the difficulties faced by so many of the LDCs in terms of unsustainable debt
burdens, and the associated social and economic costs, the international community, operating
bilaterally and through the international financia l institutions, has pushed forward the enhanced
initiative in favour of highly indebted poor countries, or HIPC. This is designed to lower debt burdens
to sustainable levels, typically defined relative to the export earning capacity of a country. The HIPC
debt initiative is already providing twenty-two countri es with interim relief.  In fact, when the dust is
settled, it is expected that the HIPC debt load will be reduced by almost two-thirds. Finance Ministries
of the G-7 and other developed countries have worked hard with the international financial
institutions over the last couple of years to ensure that interim HIPC finance was available, but there
is still much more to do.
No amount of HIPC debt reduction or Official Development Assistance (ODA) can guarantee
that we will reach those poverty reduction goals. Poverty reduction is not just a question of
redistributing income and wealth.  Economic growth is required to generate additional income and
wealth to redistribute.  Stimulating growth, however, is a complex issue.  ODA in and of itself can
play a useful role in stimulating growth, but it is far from enough.  The needs are so great that noimaginable increase in ODA, however well spent, would ever be sufficient to meet them.
Private sector-led investment and economic development must, therefore, be the engine for
growth to meet LDC needs, and development policies need to recognize this.  In turn, if development
policies are to successfully stimulate the private sector, developing countries must focus on
strengthening their institutions.  Domestic residents will not leave their savings at home and foreigninvestors will not send in their capital if a country’s institutions do not inspire confidence that they
will be able to benefit from the return on those assets.  Without the required savings and investment,
economic growth is unlikely to be initiated.WT/LDC/SWG/IF/15
Page 35
Business will prosper, providing essential employment and income, in places where there is a
conducive regulatory environment - one characterised by sound macro-economic fundamentals, a
mutually agreed bargain between investors and the government based on transparency, predictability
and fairness.  In other words, business will come to countries where good economic governance
reigns.
Both the literature on the effectiveness of development assistance and, more recently, the
practice of private investors, show that a considerable premium attaches to a business-friendly
economic and institutional environment.  If we look at the widening range of spreads on various
emerging market bonds, it is clear that investors are now able to -- and do -- differentiate between
those countries that pursue good economic policies and those that do not.
When I say, with no particular claim to originality, that good economic governance is vital for
development and growth, and thus for poverty reduction, what do I mean?  I mean a fair and effectivelegal and institutional framework, reinforced by a culture of competent, transparent and accountable
public management, committed to eradicating corrupt practices.  It necessarily features governance
based on the principles of inclusion, whereby all those potentially affected by regulation, domestic
and foreign alike, can provide input, and can know  the rules of the game.  Good economic governance
thus helps to ensure that market participants, the local population, and potential foreign investors,have confidence in the government and in its development policies, in the rule of law – so that
contracts can be relied upon – and in the country’s financial institutions. From Canada’s point of
view, good governance is also an important criterion of our bilateral assistance programs and is a
condition for determining which countries benefit from a moratorium on debt service payments to
Canada, under the Canadian Debt Initiative announced in December.
It is now increasingly recognized that, to encourage sustainable growth, development
spending must focus on supporting the establishment and strengthening of the institutional framework
needed to inspire savers’ and investors’ confidence.  In the past, development efforts by countries
themselves, as well as by bilateral and multilateral agencies, emphasized specific projects, particularly
for large physical infrastructure, as a means of stimulating growth and economic development.  Oftenthe projects were not well co-ordinated and did not have the desired results.  Projects were often
poorly integrated with the rest of the developing economy, which did not have the capacity to benefit
from them.  Emphasis in development spending ar ound the world, including at CIDA, is now shifting
towards the effective integration and coordination of a range of development activities, including
institutional and capacity-building projects.  ODA can act as an important catalyst for the human
resource development and good economic governance that are essential foundations for growth. As it
bears fruit, we can hope to see the private sector expand with increasing confidence in countrieswhere it was previously hesitant to operate.
Given the need to ensure private sector-led economic growth to allow countries to reduce
poverty in a meaningful way, fostering domestic savings and encouraging foreign investment are two
essential components of a development strategy.  Promoting trade is a third.  While debates may exist
about the importance of trade to a country’s growth, there is no evidence of a country successfullyachieving sustainable growth without it.  Growth has usually been associated with an increasing trade
to GDP ratio.  Increased exports are the vehicle by which hard currency is earned, capital equipment
imported and productivity, income and wealth increased.  In countries where domestic savings are
low, as is the case in almost all LDCs, foreign direct investment is also a critical ingredient.
A few LDCs, including such countries as Bangladesh and Cambodia, have had important
successes in participating in the world trading system.  But most have not.  It is for this reason that
Canada and many other WTO Members believe that the greater integration of the developing world
into the global trading system is a key goal, as well as a critical component, in the launch of any newWT/LDC/SWG/IF/15
Page 36
round of multilateral trade negotiations.  Thus the early launch of a new Round is key to the
development prospects of developing countries in general, and least developed countries in particular.
It is within this context that the notion of “m ainstreaming trade” should be examined in the
course of this Seminar.  What does it mean?  Mainstreaming trade includes many things.  It is must
not be interpreted solely as meaning teaching people how to understand and interpret WTOagreements.  That is not to say that Canada does not support a clearer and more directly funded role
for the WTO in providing this type of trade-related technical assistance.  But this is only a small part
of the story.
Mainstreaming trade encompasses building the necessary institutional capacity in developing
countries to permit them to participate in the in ternational trading system.  For example, Finance
Ministers have to ensure that their country’s financial sector is well regulated.  It does not have to be
the most sophisticated in the world to permit part icipation in the global economy, but it has to be
sound.  Mainstreaming trade means looking at other parts of economic regulation in a similar way:
being able to ensure that goods meet internat ionally-agreed-upon standards for safety; being capable
of proving that agricultural products come from a pest or disease-free area; and supporting the ability
of private sector to market goods and services abroad in a timely and effective manner.
But mainstreaming trade also means that governments need to reflect on how to use most
efficiently the limited resources they can devote to trade issues.  There are many aspects of
developing countries’ institutions that can usefully be enhanced to improve their ability to trade with
the developed world, including customs facilitation measures, intellectual property rules, private
commercial regulation, and administrative and judi cial review procedures for commercial disputes
between private parties and government.  But, as with all other aspects of development, it is thedeveloping governments themselves that must take responsibility – ownership, if you will – for the
implementation of these policies if they are to be effective.  Country ownership of development plans
therefore means that the country itself needs to make the decisions.
For example, a country may consider that the expense of putting together a developed world-
consistent inspection system is too great, given the amount of agricultural exports to the North that arelikely in the short-run.  It may be worthwhile, instead, for that country to focus on greater economic
integration with neighbouring countries as a means of increasing trade and promoting economic
growth, provided that this is done in a manner that is consistent with the principles underlying the
world trading system.  It is encouraging in this re gard to see the recent progress in efforts to rebuild
the East African Community.  I hope they will capitalize on the useful work done by Uganda in the
trade area in its development planning.  In sum, strategies for mainstreaming trade need to be country-
specific and country-owned to be viable and successful.
Ultimately, mainstreaming trade means giving greater visibility to the linkages between trade
and all other related policy areas.  The creation of an environment that encourages trade is
instrumental to sustainable, long-term economic growth.  That environment will require changes to
the financial and commercial institutional infrastructure, including in areas such as accounting,
corporate governance, and supervision of financial institutions.  Development planning thereforeneeds to consider the needs associated with th ese changes alongside improvements in health,
education, general social conditions and the creation of adequate social safety nets.
The Integrated Framework (IF) can be an important mechanism to mainstream trade concerns
in development strategies.  The IF was initially conc eived as an instrument of co-ordination, to ensure
that institutions involved in trade-related technical assistance were aware of each others activities.The IF was grounded on assessing individual country needs and priorities.  While all of us would have
liked to see more tangible results at this point, I believe that the basic thrust of the IF remains sound.
Indeed, much important groundwork has been done, in cluding the intellectual effort leading to thisWT/LDC/SWG/IF/15
Page 37
Seminar.  The IF can help to integrate country-defined trade-related technical assistance and capacity
building needs into broader development and economic planning frameworks.
How can we accomplish this?  One vehicle is the Poverty Reduction Strategy Paper (PRSP)
process.  You may recall that this was conceived in 1999 to ensure that funds freed from the HIPC
debt initiative were used for poverty reduction.  PRSPs, supported by the regular World Bank CountryAssistance Strategies (CAS), are increasingly b ecoming blueprints for national development and
poverty reduction strategies in the least developed countries, as well as being mechanisms for co-
ordinating donor development assistance.  Obviously, in the rush to get as many countries to the HIPC
decision point as possible, the interim PRSPs di d not focus on as all aspects of development and
poverty reduction.  For example, few countries have identified trade as a policy priority in their
interim PRSPs, although Uganda has done good work on trade in its full PRSP.  As the process
develops, the PRSPs and the CAS are supposed to be developed in tandem.  Given their significancein development policy, it is important that trade pol icy issues figure prominently in their formulation
and implementation.
The independent review of the IF last summer highlighted different expectations about the IF
held by recipients and donors.  Governing bodies of the core IF agencies agreed with the
recommendations that trade be better integrated in national development strategies, and that steps betaken to strengthen the secretariat and the coordination functions.  There was, however, some
hesitation regarding the proposal for a trust fund.  I think this reflected a concern that the IF would be
turned into a new bureaucracy without providin g comfort that the deficiencies noted in the
Independent Review would be addressed.  I am pleas ed that discussions over the past months both
within the relevant institutions and among WTO Members have helped clarify the intent of theproposed pilot scheme.  Canada is examining th em with a view to de termine how we can best
participate. While the IF focuses on the needs of  LDCs, the international community must remember
that lower-middle and middle-income countries also have trade-related technical assistance and
capacity building needs.
Let me conclude by offering a few observations on how mainstreaming trade in broader
development strategies requires all of us, developed and developing economies and international
institutions, to take a hard look at how we can place increased emphasis on trade-related technical
assistance and capacity building in our ongoing programs.
• While the IMF is concerned with stable macroeconomic environments that are necessary
conditions for an effective and successful trade regime, it must also consider the impact on
government revenues of potential required changes in trade policies and devise methods tocompensate for any losses.
• The ITC can continue to pursue trade enhancement activities particularly in the areas of supply
side development and promoting private sector readiness for export.
• UNCTAD and the UNDP should provide policy assistance in managing the domestic adjustment
to a more open trade environment.
• In the WTO, I recognize that technical assistance is limited by budgetary and institutional
constraints.  However, a more integrated approach means that existing mechanisms could be
levered to achieve the desired results.  The WTO could use Trade Policy Reviews to build up thecapacity of LDCs to understand the rights and responsibilities of being a WTO Member.
• The World Bank, in preparing a CAS, should be mo re proactive in engaging with national trade
policymakers to determine the nature and extent of the trade-related technical assistance and
capacity building needed in the country.WT/LDC/SWG/IF/15
Page 38
• At the same time, Trade Ministers and Trade Ministries of LDCs need to become more involved
in national debates on the elaboration of full PRSPs so that informed decisions can be made aboutthe allocation of scarce resources.
• Finally, for donor countries the concept of mainstreaming trade means they need to be ready to re-
examine development assistance priorities to ensure they are sending a coherent message acrosstheir different assistance mechanisms and institutions.
In sum, we have a collective responsibility in this endeavour.  Mainstreaming trade into
broader development frameworks is where the nexus of trade, finance and development policies takes
its most concrete form.  The next two days will allow you to examine the importance of including
macroeconomic and regulatory policy reform along  with trade liberalization in a package that
promotes poverty reduction and development.  From an LDC perspective, you will also be examining
practical ways to build a consensus on mainstreaming in domestic constituencies.  From the donors’
perspective you will consider ways to reconcile the different frameworks for the delivery of trade
related technical assistance both bilaterally and multilaterally.  Sessions will consider the bestpractices to integrate trade into broader development strategies.  The extensive work of the OECD’s
DAC may provide valuable information in this area.  In all of these sessions the focus will be on how
to bring together trade and other aspects of economic policy into one, coherent development plan.
Looking ahead, the output of this seminar will he lp to feed into the broad international effort
currently underway in a variety of fora to pave the way for the UN Conference on Financing forDevelopment scheduled for next year.  Poverty reduction and development are complements, not
substitutes.  Economic growth is needed to create the income and jobs that will reduce poverty.  And
trade is a key instrument for bringing about that growth.
Working together, we can help to ensure that  trade is mainstreamed into the development
process in order to bring developing countries in to the mainstream of the world economy, with a
much better sharing of the benefits from the continuing globalization of economic activity.
Thank you
H.E. Honourable Kweronda Ruhemba, Minister for Economic Monitoring, Office of the
President, Uganda
I would like to thank the organisers of this seminar for allowing me the opportunity to
participate this important meeting and for providin g me with the opportunity to make some brief
remarks on the subject of our gathering.
Let me begin my presentation by quoting a prominent African,  (the Executive Secretary of
the United Nations Economic Commission for Africa) on Africa's expectations on multilateral
relations -  "African countries arrived in Seattle for the Third WTO Ministerial Conference with both
aspirations and hope that the conference would mark a new beginning in multilateral trade
negotiations within the framework of the World Tr ade Organization.  They came to press for a
"Development Round" that would addr ess the deepening poverty in their countries and modalities for
their effective integration in the global trading system.  They came armed with a set of proposals to
make the concerns of the world's poorest peoples central to the rapidly expanding global tradingsystem.  They also came to Seattle to argue that industrialised countries should open their markets to
African exports, eliminate the biases against developing countries inherent in the Uruguay Round
Agreements and adopt a package of special and d ifferential treatment in favour of the Least-
Developed Countries" .WT/LDC/SWG/IF/15
Page 39
The above quotation summarizes the expectations of Africa regarding a new approach to trade
negotiations from the developed world and has a lot of relevance to today's seminar.  With that
general perception and starting-point I would like to take up some practical matters which would
provide the basis for significant progress in this difficult area of international dialogue.
To me, having a more coordinated approach to international development, finance and trade
policies is a means towards us breaking out of the vicious circle of savings, low investment, low
growth, falling share of world exports and increasing debt which frustrates our efforts to attain the
overarching goals of poverty eradication.
There is increasing recognition that multilateral agencies, bilateral donors and governments
need to improve coordination in the delivery of technical assistance in the areas of trade, finance anddevelopment.  In other words, we need to mainst ream trade, we need to mainstream trade issues,
programmes and projects into the overall policy framework for development and poverty eradication.
Sector-wide approaches:  a new approach to trade policy
A sector-wide approach to partnerships between donors and recipient countries has been
developed in recent years as a key instrument for the coordination of policies between donors and the
national authorities.  However, so far this approach has mainly concentrated on areas in which donors
have mounted large capital assistance programmes in most LDCs.  There is a need to deepen the
approach to other sectors where the main common interest concerns policy coordination and relatedtechnical assistance.
This will enable the development of comprehe nsive, coordinated programmes, involving the
participation of all stake holders in a genuine partnership.
A practical suggestion would be for the WTO, other concerned multilaterals, interested
bilaterals and national authorities to come together  to initiate sector-wide working groups in relation
to trade policies.  I place this on the table as a specific proposal.  Why am I tabling this proposal?  I
am tabling this proposal because of some of the visions I have made in my own country.  In other
words the Integrated Framework has problems, problems of resistance to change even when you bring
these agencies together there is a problem that each one of them is locked in its usual modus operandi .
There is a problem of lack of give and take.  Each one of them would like to pursue its agenda without
adulterating it with other agencies' ideas.  So I am tabling this problem for discussion.
The integration of trade in country assistance strategies (CAS)
The integration of trade issues in donor country assistance strategies has so far mainly been
concerned with conditionality related to the liberalization of broad policy instruments (e.g. other areas
the dismantling of exchange controls, the reduction in tariff levels etc).  This approach has been
justified, but has stopped short of focusing on positive interventions that may be required to promote
our exports.
 In terms of the evolution of Structural Adjustment policies in Africa, we are willing to agree
that considerable success has been achieved in liberalizing our economies and putting our budgetary
policies on a sounder footing.  However, when you l ook at the balance of payments of most African
countries, progress has not yet translated into dramatic improvement in our trade performance.  Weneed a fresh effort to look at this problem.  In particular I would like to pose this question:  even if
structural adjustment was a necessary stage in the revival of our economies, has the package of
policies been sufficient to engender the export led growth that can underpin our growth and reduce aid
dependence, and persuade our populations of the benefits to be reaped from economic openness?WT/LDC/SWG/IF/15
Page 40
What may be required is an integrated donor-national effort to look at his problem in an
unbiased and open fashion.  I would propose such an initiative.
Growth of exports
Most LDC countries have been encouraged to pursue export policies that are claimed to be
consistent with their static comparative advantage based on an abundance of natural resources and
unskilled labour.  However, this approach has not succeeded.  There has been a loss of market share,
not only because of inefficient agricultural practices, weak marketing, poor infrastructure and civil
conflicts, but also because of increased competition from new commodity producers.  Also, many of
the old regiments of the Prebish era  regarding the limited dynamic potential of specializing in primary
commodities continues to have some credibility.
Urgent actions need to be taken to reverse the poor performance in traditional exports and to
move into higher value added resource based industries with more buoyant market prospects.  This
requires substantial technical help in identifying the trading opportunities and transferring the skills
required to take advantage of those opportunities.  This requires, in turn, much more effective
technical assistance than was available in the past.
The issue of the efficiency of technical assistance to the trade sector can be seen as part of a
larger problem of resource waste and confusion in the policy-making process as the result ofuncoordinated technical assistance initiatives, which lead to combination of duplication of efforts (in
those areas that are fashionable with donors) and neglect ( in those areas that are not).
The solution to this problem is a joint donor-recipient programming exercise that seeks to
optimise return form the scarce technical assistance resources available.
A related problem is the obvious fact that technical assistance programmes are still too supply
driven, reflecting the donor interest, rather than demand driven, responding to national concerns.  In
the trade area, there may be a particular problem that at the national level there may be a limited
knowledge and comprehension of the implications of the arcane matters, which are the daily bill of
fare at meetings such as this.  Therefore a pre-condition for more balance in this regard is education
programmes that provide an opportunity for national stakeholders to increase their understanding ofthe issues and the interests at stake.  It is important that this should be done in an open and unbiased
fashion, presenting all sides of the various issues.  It would not work if it were seen as propaganda for
a particular viewpoint, or as a means of promoting the agenda of any given institution.
Capacity building
One of the most effective ways of encouraging capacity building to take place is to increase
responsibility and ownership.  As an example in the case of Uganda, the Education Sector Investment
Plan experience where donor support to the education sector has increased the national capacity to
develop, monitor and account for sector activities, which in turn justified an increasing flow ofresources.  Increasing levels of untied budget support have improved the level of responsibility and
ownership of the sector programme.
To enhance capacity in programme implementation it is imperative that partners reach
agreement on shared objectives and commit themselves to the major policy and resource actionsessential to achieving the shared objectives.
Capacity building to improve the partnership process through improved information flows,
increased consultation in developing a comprehensive development framework, coordinated sector-WT/LDC/SWG/IF/15
Page 41
wide planning and increased accountability for service delivery strengthens good governance.  In turn,
good governance strengthens ownership.
Debt relief and trade issues
We in Uganda have been among the first beneficiaries of HIPC, and we appreciate the
recognition we have received for a poverty focused policy agenda.  However, we also recognise that,
justified as it is, debt relief is not the longer-term solution.  For that, we need the export growth that
prevents us from falling into debt.  Likewise, the longer-term solution to our poverty problem is to
seek means whereby export growth can generate sustainable livelihood options for many of our poor,
both by the development of traditional and non-traditional export activities.  This requires us to ensure
market access for our products.  It is an irony that we in developing countries who promote the virtueand possibilities of export led growth find that when we begin to succeed, the protection lobby in the
developed countries succeeds in raising all sorts of barriers to access developed country markets.
A coordinated approach to LDCs
Just like there is a need for greater inter-agency coordination at the international /multilateral
level, there is an equally important need for LDCs to enhance their capacity to coordinate their trade-
related efforts.
The different efforts at country level in LDCs differ in terms of both the scale and intensity of
interventions.  Nevertheless, there are shared concerns and much to be learnt from pooling experience.
In the global economy, individual LDC's find themselves marginalized – their individual economies
are too small to carry much weight at the internati onal negotiating table.  It is only by identifying
common interests, understanding each others' problems and experiences and acting together that they
can hope to be heard.
The less developed countries should initiate a process for dialogue amongst themselves and
with interested multilateral, region al and bilateral partners.  This allows for an opportunity to share
views and experiences as well as providing an opportunity for agreeing on the necessary support to
the respective countries.
Lastly in my opinion, a coordinated approach to trade-related  technical assistance brings
about the following benefits:
• Avoids duplication of effort and as such maximises the return from available
financial resources to LDCs.
• Promotes a greater level of ownership of programmes and projects by LDCs.
• Lastly, a coordinated approach also enhances the synergies that may exist between
the different sub-programmes and projects thereby promoting efficiency andeffectiveness in the overall planning process.
I thank you very much.WT/LDC/SWG/IF/15
Page 42
H.E. Dr. Nkosana Moyo, Minister of Industry and International Trade, Zimbabwe
How can we build trade priority areas of action into national plans for development and
poverty reduction ?
I would like to paint a picture of what I perceive as challenges in trying to discuss
development on the one hand and poverty reduction on the other.  There is an inherent contradiction
in the two approaches.  The first problem is that international fora, like the WTO which sets
frameworks for international trade relations, are more aligned to Governments as opposed to theprivate sector.  However, what emerges out such fora  must be implemented by the private sector.  The
two bodies are motivated by different factors: while the private sector is motivated by profits,
international governments would be pressured to channel resources towards poverty alleviation.  It is
important to recognise the tension between the two agents.
Another challenge is to invest in the developm ent aspect as opposed to the poverty alleviation
aspect.  It is important to bear in mind that, in managing the limited resources of developing countries,
they need to create wealth before they can pull reso urces in poverty alleviation.  However, it is often
easier to request other countries to pull resources for poverty alleviation, than for strengthening
businesses of developing countries, that is the development aspect.  If a country, like mine, asks a
donor that we would like to create wealth so that we are able to direct resources for education or anAIDS programme, the donor is unlikely to support such approach because some lobby groups are
afraid of competition and thus of losing jobs.
Having said so, let me attempt to put my thoughts across on what I believe is necessary to be
recognized in the issues of development and poverty reduction.  In the first instance, for a county to
be integrated into the global economy, it is important to identify and take advantage of the
opportunities that are existing in the trading system.  The country also has to fulfil its multilateral
trade obligations, and formulate and pursue development strategies within the framework of theseobligations and opportunities.  It is also important to be able to defend its acquired trade rights and
privileges, set trade objectives and effectively pursue them in trade negotiations.  Growth, while
essential, is not always sufficient for sustained poverty reduction.  Moreover, trade liberalization
defined in terms of the reduction of border protection cannot alone guarantee economic growth.
A strategy for trade expansion should embrace a broader set of country level initiatives within
the context of an appropriate macroeconomic incentive environment and a comprehensive approach to
overall development goals and poverty reduction strategies.  It should also address supply side
constraints by investment in infrastructure and human capital development, as well as institutional
reform and a conducive legal environment to increase investor confidence.
Developing countries need support from international communities and donor agencies to
attract investment. Social programmes, to offset adjustment costs of liberalization,  should also be put
in place including provision of safety nets, retraining and other transitional arrangements.  A country's
comprehensive trade policy is to be consistent with other appropriate policies such as foreign
investment, competition, environmental protection and labour practices. Linkages among trade
reforms, economic growth and poverty reduction will be realized if correct sequencing of reforminitiatives is undertaken.  Apart from inflows of direct investment, countries need to enhance
institutional transparency and governance.
Recent findings by the Department of Foreign Trade, demonstrate trade diversion and the
erosion of trade preferences especially for developing countries dependent on a single export
commodity.  The trickle down of any benefits rests on a number of factors such as penetrating new
markets, domestic macroeconomic policies, technological innovation and capacity to adjust to newWT/LDC/SWG/IF/15
Page 43
realities.  Beyond these national efforts the potential benefits of liberalization will depend on the
willingness of developed countries to implement negotiated market access decisions in a manner
which increases developing country gains from trade.
Uruguay Round commitments made by developing countries defined the parameters for their
integration into the global system.  Developing countries pledged to remove national policy barrierswhich could hinder their future efforts to attract investment by global corporations in their national
economies: thereby integrating into the global economy.  But as I attempted to point out above there
are tensions implied in some of these relationships.
In conclusion, developing countries have to grow economically, to achieve the international
global poverty reduction goal of 2015.  Developing countries, need international support in the form
of foreign direct investment, technical assistance, support for regional trade integration and access to
markets, trade facilitation and debt relief. Once again we should not underestimate some of thetensions or contradictions that are inherent in some of the issues that I highlight here. Enhanced
market access without addressing technical assistance issues will not achieve the desired results.
Technology transfer issues also need to be addressed.  At present a large portion of technology
transfer into developing countries takes place through direct pledges of capital good imports.  It is
imperative for developed countries to improve access for developing countries through the transfer oftechnology, on a non-profit, non-commercial basis as provided and agreed in multilateral
commitments on transfer of technology.  Lastly, the cohesion of supporting domestic policies such as
the mutual reinforcement of trade reforms and exchange policies, domestic tax reform and sound
macroeconomic policies is also critical.  I trust that the deliberations of this seminar will facilitate the
ongoing negotiations in the multilateral fora.
H.E. Mr. Koichi Haraguchi, Ambassador/PR of Japan, Geneva
There is no question that trade is a powerful engine of economic development.  There have
been a number of countries, including post-war Japan, which have achieved rapid economicdevelopment through expansion of trade with other countries.  Increased exports generate more
income, more capital, and above all, more self confidence and that is a better chance for development.
In order to expand trade, it is necessary to have improved market access.  As long as there
remains many high barriers to trade, we cannot e xpect to expand our trade, however hard we may try.
It is also necessary to have strengthened rules on international trade.  Without them, international
trade can still be subjected to abusive management by economically strong countries.  Fortunately, the
WTO and its predecessor the GATT, have achieved important improvement in market access andintroduced sets of rules that govern international trade through a series of rounds of trade negotiations.
Of course, there still remains much room for further improving market access and strengthening rules.
This is why some countries, including my own, have been stressing the need to launch a new round at
an earliest opportunity.
Having said that, however, I have to recognize that improving market access and
strengthening rules alone are not sufficient to lead to development especially of those for developing
countries.  Due to different levels of capacity among countries, in many cases, developing countries
have not been able to make good use of the opportunities generated by the increase of market access
as much as developed countries.  Also due to the lack of necessary know-how and experience, some
developing countries have not been able to observe regulations under the WTO rules in spite of theirgood intention, thus losing their credibility in the international trading community and sometimes
exposing themselves to a potential danger of retaliation under the Dispute Settlement Mechanism.WT/LDC/SWG/IF/15
Page 44
One way to cope with this situation is to supplement our market access and rule making
efforts with special consideration to developing countries.  The introduction of GSP was a typical
example.  An initiative for tax-free, quota-free treatment for products of the least-developed countries
is another recent effort in this direction.  On our part, my government is now preparing necessary
legislative measures which will establish a special preferential treatment for LDC products.  Weexpect that these legislative measures be approved by our Diet by this April, the beginning of our
fiscal year.  In the WTO rules, special and differential treatment falls under this category.  It is also
crucial to find appropriate solutions on as many so-called "implementation issues" as possible.
But these are all special measures.  There is another more basic approach to cope with a
situation, and that is, to promote trade-related capacity building in developing countries.  By
promoting their trade-related capacity, many developing countries would be increasingly able to
exploit improved market access opportunities to become more credible partners, and thus more activebeneficiaries of the rules-based trading system.  This point is well expressed in the communiqué of the
G8 Summit last year, which states "In view of critical importance of trade for the development of
developing countries, trade-related capacity building should be substantially expanded, which would
be conducive to the more effective participation of developing countries in the system and to fuller
utilization of improved market access in their favour".
Incidentally as you might have already noticed, when I say "trade-related capacity building", I
have two different types of capacities in mind.  One is a type of capacity which will enable developing
countries to observe rules better, this might be called "trade rules compliance capacity".  The other is
a type of capacity which will enable them to better exploit the improved market access for their
exports.  This might be named "trade competitiveness capacity".  I believe that they are closelyconnected with each other and both of them have to be promoted through international cooperation.  I
might add that foreign direct investment is also extremely importance for the improvement of what I
called "trade competitiveness" capacity building of developing countries.  This was already
recognized in the Development Partnership Strategy adopted in the Development Assistance
Committee (DAC) in 1996, which stressed the three pillars for development promotion:  trade, aid andinvestment.  This is one of the reasons why my country has been insisting that we should work for an
international direct investment rules in the next round of WTO negotiations so as to prepare better
environment especially in developing countries to attract much-needed foreign direct investment and
to strengthen their "trade competitiveness" capacity.
Japan attaches much importance to building trade-related capacity of developing countries,
both in what might be called "trade rules compliance" and "trade competitiveness" capacities.  For
instance, my Government, in cooperation with WTO,  organized seminars on such issues as dispute
settlement procedures and practices the knowledge of which is very critical for developing countries'
effective participation in the multilateral trading system.  The WTO and the Japanese Government are
also planning to organize a seminar on investment in Malaysia in March, this time in conjunction with
the UNCTAD.
Japan has also been actively promoting bilateral development assistance directed to trade-
related capacity building of developing countries.  This policy of ours was well expressed by the late
Prime Minister Obuchi when he attended the UNCTAD Conference in Bangkok in February last year.
There he stated that Japan intends to extend the systems to train 2,500 personnel of developing
countries in the trade-related  areas in the coming five years.  In line with this basic policy, our
bilateral technical corporation in trade-relate d capacity building has been steadily extended for
example, through JICA, Japan International Corporation Agency, which is our implementing agency
of technical corporation.  We dispatch experts, receive trainees and implement projects in such areas
as customs administration, intellectual property rights, trade policy formation and enhancing
productivity of industries.  In APEC, too, of whic h Japan is a founding member, Japan took the
initiative to organize two seminars on trade and investment last year.  We are also glad to haveWT/LDC/SWG/IF/15
Page 45
enabled to make intellectual contribution to more  effective capacity building by proposing "Strategic
APEC Plan" on building capacity to implement WTO Agreements.
I am afraid I have dwelt on Japan's efforts too long.  Mainstreaming trade into country
development strategies requires more qualitative and quantitative efforts, both bilaterally and
multilaterally, and both on donors and developing countries sides.  In this connection, first I believewe need to promote more collaboration and coordination among donors.  And the Integrated
Framework is very relevant in this regard.  Japan supports the effort to revamp Integrative Framework
and make it more workable.  The WTO Secretariat's latest proposal on the Integrated Framework
including the utilization of the Trust Fund to conduct model projects is an interesting idea, which
reserves further serious consideration in this regard.
Second, naturally we should strive to implem ent trade-related capacity building efforts more
effectively.  One way to meet this requirement is to further promote "country by country" approachwhich directs these efforts more in line with specific needs of each individual developing country.  On
the other hand, as we have been exploring in the context of the implementation of the Customs
Valuation Agreement based on the suggestion by the European Commission, it might also be useful to
identify the types of trade-related  capacity buildin g most needed in each agreement and concentrate
our effort to assist developing countries to use these types of capacity.  This may be called"Agreement by Agreement" approach.  We need to employ those two approaches in a flexible manner
so as to promote capacity building most effectively.
Third, it is also vital to promote closer dialogue and cooperation between aid and trade
communities.  Once again, the Integrated Framework is important in this respect because it could be
effective to bring two communities together, if managed properly.  We thus believe that themanagement structure of the Integrated Framework and the Trust Fund should be designed in such a
way as to take into account the relevant activities of the bilateral donors.
Having said that, let me say a few words about the Okinawa Workshop on Trade-related
Capacity Building which is scheduled to be held at the beginning of March this year.  The workshop
is to be co-sponsored by the WTO and my government and will be participated by donor countriesand international organizations as well as developing countries.  This workshop is in a sense a follow-
up the Okinawa Summit of last year where the G8 leaders committed their support to improving
trade-related capacity building of developing countries.  Its objective is to explore ways of
mainstreaming trade in country development strategies and strengthening trade-related capacity
building through serious discussion between aid and trade experts.  More specifically, this workshop
intends to further the deliberation on how to achieve
(a) to enhance a system to the least-developed countries by strengthening the Integrated
Framework;
(b) to develop "agreement by agreement" approach to better reflect expertise in
individual sectors such as customs valuation; and
(c) to strengthen country by country approach through, for example, case studies of 
individual donors with a view to sharing experiences and lessons.
The Okinawa Workshop is also expected to serve as a good opportunity for interaction
between aid community which has ample expertise on effective development assistance and the trade
community which has ample expertise and know-how on WTO agreements, domestic implementation
and trade policies and negotiations.WT/LDC/SWG/IF/15
Page 46
It is encouraging to note that the importance of  trade-related capacity building is gaining more
and more recognition.  There are tasks to take on, but I believe that this can be addressed by collective
wisdom and efforts of all the Members, of both trade and aid communities.  My government intends
to continue to play a leading role in this endeavour along with other countries.WT/LDC/SWG/IF/15
Page 47
ANNEX III
III. SEMINAR PROGRAMME
Monday, 29 January 2001 :
Moderator: Mr Andy Stoler, Deputy Director General, WTO.
OPENING SESSION
08.30:  Welcoming remarks  by Mr. Mike Moore , Director-General WTO
08.50:  Introductory remarks : Integrating LDCs into the Global Economy: Trade,
Finance and Development Perspectives
H.E. Mr. MD Abdul Jalil , Minister of Commerce, Bangladesh (LDCs'
Coordinator)
09.10:  Introductory remarks : Importance of Integrating Trade, Finance, and
Development Perspectives
H.E. Mr.Jonathan Fried , Senior Assistant Deputy Minister, Department of
Finance, Canada, (G-7 Deputy for Canada).
09.30:  Introductory remarks : The Necessity of Coordinated Approaches by
Multilateral Agencies and Bilateral Donors to Technical Assistance and to
Development, Finance and Trade Policies, Programmes and Projects
Hon. Kweronda Ruhemba , Minister for Economic Monitoring, Office of
The President, Uganda.
10.00: Introductory remarks : How can we build Trade Priority Areas of Action
Into National Plans for Development and Poverty Reduction?
H.E. Dr. Nkosana Moyo, Minister of Industry and International Trade of
Zimbabwe.
10.20 : Introductory remarks :  A Policy Framework for Trade-Related Technical
Assistance: Okinawa Initiative.
H.E. Mr. Koichi Haraguchi, Ambassador, Permanent Representative of
Japan, Geneva.WT/LDC/SWG/IF/15
Page 48
PANEL A: TRADE, MACROECONOMIC AND REGULATORY POLICIES
10.30 : The economics of trade policy, trade reform and liberalization as part of
a wider package of domestic economic reform
Trade reform and liberalization are necessary components of comprehensive
policies for poverty alleviation and development.  Trade liberalization while
vital to development, does not stand alone.  Companion policies are also
required, as part of a wider package of economic reform, without which the
dividends from an open multilateral trading system are minimal, and
integration into the global economy will be retarded.  This panel will examineessential and required companion policies that constitute part of the wider
package of economic reforms, and which intervene in the complex
relationship between trade liberalization, poverty alleviation and
development.
Richard Eglin , Director Trade and Finance Division, WTO
Professor Frederic Jenny , Chairman, WTO Working Group on Trade and
Competition Policy & Conseil de la Concurrence, France
11.00:  Panelists
Panelists : H.E. Mr. Srinivasan Narayanan, Ambassador/Permanent Representative of
India to the WTO, Geneva
Philippe Brussick, Chief, Competition, Law and Policy and ConsumerProtection Section, UNCTAD
Clem Boonekamp, Director, Trade Policies Review Division, WTO
Anh-Nga Tran-Nguyen, Head, Investment  Issues Analysis Branch, Division
on Investment, Technology and Enterprise Development
Grant Taplin, Director, IMF Office, Geneva
Discussions
13.00 : Lunch breakWT/LDC/SWG/IF/15
Page 49
PANEL B: MAINSTREAMING: CONCEPT, APPROACHES,
IMPLEMENTATION AND FUNDING
14.00 : Mainstreaming trade into country development plans and poverty
reduction strategies: how do you mainstream? concept, approaches and
implementation
Panel B will focus on clarifying the concept and value of mainstreaming , and
setting-out the mechanics of how a trade agenda and trade priority areas of
action are actually integrated into development plans and poverty reductionstrategies. How do you mainstream?  The different approaches and options to
mainstreaming will be discussed. How do key economic domestic ministries
and departments coordinate and seek an integrated approach that includes
complementary market reforms, supporting policies and institutions?  Who
arbitrates domestic discussions to establish a national economic consensusthat is integrated and balanced, and to which trade priority areas of action are
integral?  What are the main approaches, and which are the best practices?  Is
external policy support (intervention) by multilateral Agencies necessary to
achieve the mainstreaming of a trade integration agenda, as a vital public
good, into development plans and poverty reduction strategies?  Is there acost to mainstreaming, how is the cost calculated, and who pays for costs of
mainstreaming?
Ataman Aksoy , Economic Advisor, Economic Policy, Development
Prospects Group, World BankGraham Chipande , Senior Economist, UNDP in the Gambia
H.E. Mr. Srinivasan Narayanan , Ambassador/Permanent Representative of
India to the WTO, Geneva
14.30:  Panelists
Panelists : John Cuddy, Director, International Trade Division, UNCTAD
Anne McGuirk, Assistant Director, Trade Policy Division, Policy
Development and Review Department, IMF
Ignacio Garcio Bercero, Trade Division, European Commission, Brussels
Bahle Sibisi, Deputy Dire ctor-General, Department of Trade and Industry,
South AfricaGrant Taplin, Director, IMF Office, Geneva
DiscussionsWT/LDC/SWG/IF/15
Page 50
PANEL C: DOMESTIC CONSTITUENCY FOR MAINSTREAMING:
EXCHANGE AND REVIEW OF COUNTRY EXPERIENCES
16.30 : Building a domestic constituency to sustain mainstreaming: Exchange of
views on country experiences
Dr. Ravindra Ratnayake, Chief, Trade Policy Section, Economic and Social
Commission for Asia and the Pacific (ESCAP)
Michel de la Taille,  UNDP Resident Representative, Mauritania
A major challenge in the implementation of policy, particularly for public
goods, is how to build a viable domestic constituency, necessary for
advocacy and policy sustainability.  Public goods involve adjustment costs,
and the benefits while certain and meaningful, may not be immediate, but
medium to long-term.  Furthermore, there are competing national economic
choices, involving decisions on national expenditure, from the immediate andurgent to avert disasters, to the medium and long-term for sustained growth
and development.  Panel C will focus on building domestic constituency for
mainstreaming and ensuring that a trade integration agenda is part of
development plans and poverty reduction strategies.  Several developing
countries, particularly in Asia, have been successful in establishing tradepriority areas of action as part of national development plans.  The
presentation and the contributions by panelists will focus on country
experiences both from a governmental point of view, as well as from the
perspective of consultants who have assisted governments in their efforts to
build a domestic constituency.
17.00: Panelists
Panelists : Steve Hadley, Director, Office  of Emerging Markets, USAID 
James Fox, USAID Consultant for Zambia Trade Sector Round Table
Prof. Situmbeko Musokotwane, PRSP Coordinator, Zambia
Maxwell Mkwezalamba, Principal Secretary, Economic Affairs, Ministry ofFinance and Economic Planning, Malawi
H.E. Mr. Srinivasan Narayanan, Ambassador/Permanent Representative of
India to the WTO, Geneva
 
 Discussions
18.00: Cocktail.  Hosted by Mr. Andy Stoler, WTO Deputy Director-GeneralWT/LDC/SWG/IF/15
Page 51
Tuesday, 30 January 2001
Moderator: H.E. Mr. Ali Said Mchumo, Ambassador, Permanent Mission of Tanzania, GenevaPANEL D: GLOBAL DIMENSIONS AND CORE ISSUES IN MAINSTREAMING
09.00 : What are the global dimensions and core domestic issues in
mainstreaming ?***
Panel D will seek to identify the issues that are core to meaningful integration
of trade priority areas of action within national development plans and
poverty reduction strategies.  There is a global as well as domestic dimension
to the core issues in mainstreaming.  The issues and their importance may
also vary from country to country.  The results of this panel will assist in
improving understanding of those critical issues that require reflection in atrade integration agenda for development and poverty reduction.
Uri Dadush , Director, Economic Policy and Development Prospects Group,
World Bank
Susan Prowse , Senior Economic Adviser, Department for International
Development, UK
09.30 : Panelists
Panelists : Anne McGuirk, Assistant Director, Trade Policy Division, Policy
Development and Review Department, IMF
Sarath Rajapatirana, American Enterprise Institute, Washington D.C.
Michael A. Samuels, President, Samuels International Associates,
Washington D.C.
Gretchen Stanton, Snr. Counsellor, Ag riculture and Commodities Div, WTO
Charles Gore, Senior Economic Affairs Officer, Office of the Special
Coordinator for the LDCs, Landlocked and Island DevelopingCountries, UNCTAD
Masahiro Yamashita, Senior Advisor, Macro Economics, Japan International
Cooperation Agency (JICA)
Ould Mohamed Lemrabott, Conseiller, Mauritania
Discussions
13.00 : Lunch break
                                                     
*** An illustrative list of core mainstreaming issues  include the trade policy regime: trade and growth,
pace and sequence of domestic reform, cost of domestic protection; pace and sequence of WTO rules;development-relevance of WTO rules; market access and import liberalization;  WTO accessions; internationalstandards and exports; rules of origin; uniform tariffs and tax structures;  exchange rates and exports; exportprocessing zones; external debt and investments; balance of payment; fiscal policy; inflation and growth; and,
regional trading arrangements.WT/LDC/SWG/IF/15
Page 52
PANEL E: COORDINATION OF THE DELIVERY OF TRADE-RELATED TECHNICAL
ASSISTANCE AMONGST BILATERAL AND MULTILATERAL DONORS
14.00 : How do the different frameworks for the delivery of trade-related
technical assistance, by bilateral donors and multilateral agencies, fit
together into various development vehicles? Mainstreaming the
Integrated Framework (IF) for trade-related Technical Assistance into a
policy-framework for development and poverty reduction.
Panel E will consider the various initiatives for the delivery of trade-related
technical assistance, the development vehicles within which they operate, and
the urgent need for improved coordination.  There will be particular focus on
the new arrangements for the enhanced implementation of the Integrated
Framework within the development vehicle of the Poverty Reduction
Strategy Papers (PRSPs).
LDCs' beneficiaries of trade-related technical assistance delivered by bilateral
donors and multilateral agencies have expressed frustration at the multiplicity
of vertical initiatives with little horizontal coordination.  Improved
coordination is needed amongst bilateral donors and multilateral Agencies.Efforts at correction have begun, but need to be expanded and accelerated.
The Integrated Framework, in the past three years, has emerged as a valuable
platform for inter-agency coordination for the delivery of trade-related
technical assistance.  The IF has become a reliable channel of communication
amongst the six core Agencies and has significantly enhanced coordinationand trust amongst the agencies.  The six core Agencies recognize that the
successful implementation of the IF would be a win-win situation for LDCs,
donors and the Agencies.  The potential of the IF is enormous, but is yet to be
fully realized.  Involvement of the bilateral donors in the efforts of the core
Agencies is an urgent objective to be attained for the more effective
implementation of the IF.  In this regard, the DAC/OECD Secretariat has
been invited to a meeting of the Inter Agency Working Group (IAWG),responsible for managing the IF.  There is a strong desire that the DAC
should continue to participate in the IAWG in order to improve coordination
between bilateral donors and multilateral agencies.
The Development Assistance Committee (DAC)  is also strongly committed
to improving coordination with multilateral agencies. As a forum for bilateral
aid agencies to share experiences and good practices, the DAC increasingly
recognises the importance of trade for development and poverty reduction,
and the need to participate actively in international efforts to help build the
human and institutional capacities of developing countries to trade.  TheDAC is currently in the process of preparing a set of guidelines in this area.
The guidelines aims to foster effective partnerships between developed and
developing countries. It also aims to promote synergies between the aid and
trade communities, on the one hand, and between the bilateral and
multilateral donor communities on the other hand, particularly with regard tothe effective implementation of the Integrated Framework.  The DAC
guidelines under preparation will include: a) the importance of
mainstreaming trade into country-specific poverty reduction strategies
(PRSPs); b) facilitating the emergence of a strong country-level trade policyWT/LDC/SWG/IF/15
Page 53
process; and, c) providing a roadmap for effective donor policies and
instruments.
Richard Carey , Director, DAC/OECD Secretariat
Chiedu Osakwe , Head, Secretariat Working Group for LDCs/IF, WTO
14.30: Panelists
Panelists : Martin Dagata, Director, Technical Cooperation Division, ITC,
Rénald Clérismé, Minister Counsellor, Permanent Mission of Haiti to the
WTO 
Marcel Namfua, Interregional Adviser, Office of the Special Coordinator forthe LDCs, Landlocked and Island Developing Countries, UNCTAD
Peter Tulloch, Director, Development Division, WTO
Georges Chapelier, Principle Technical Advisor, Management Development
and Governance Division, UNDP
Jean-Maurice Léger, Director, Technical Cooperation Division, WTO
Discussions
PANEL F: WRAP UP
Moderator:  H.E. Mr. Jonathan Fried , Senior Assistant Deputy Minister,
Department of Finance, Canada (G-7 Deputy for Canada).
17.30:  General exchange of views.WT/LDC/SWG/IF/15
Page 54
ANNEX IV
IV. LIST OF PARTICIPANTS
Least-Developed Countries
Bangladesh: H.E.  Mr. MD Abdul Jalil, Mi nister of Commerce (LDCs' Coordinator)
Haiti: M. Jean René Bordes, Conseiller technique, Ministère de l'Economie et des
Finances
Lesotho: Mrs. Matseliso Mei, Director of Economic Policy, Ministry of Development
Planning
Madagascar: Mr. Joseph Rasolofonirina, Administrateur Civil, Ministère du Commerce
et de la Consommation
Malawi: Mr. Maxwell Mkwezalamba, Principal Secretary Economic Affairs, Ministry
of Finance and Economic Planning
Tanzania: Mr. Mark C. Temu, Acting Assistant Commissioner of Macroeconomic
Policy, Ministry of Finance
Uganda: Hon. Kweronda Ruhemba, Minister for Economic Monitoring, Office of the
President
Mr. Kenneth Mugambe, Assistant Co mmissioner, Economic Development
Department, Ministry of Finance
Zambia: Prof. Situmbeko Musokotwane, Lusaka
Panelists
Bangladesh: H.E. Mr. MD Abdul Jalil, Minister of Commerce
Burkina Faso: Mr. Bertin Teby, Directeur General du Commerce, Ministère du Commerce
de l'Industrie et de l'Artisanat (IF Focal Point)
France: Professor Frederic Jenny, Chairman, WTO Working Group on Trade and
Competition Policy and Conseil de la Concurrence
Gambia: Mr. Graham Chipande, Senior Economist, UNDPIndia: H.E. Ambassador S. Narayanan, Permanent Mission in GenevaMalawi: Dr. Maxwell Mkwezalamba, Principal Secretary, Economic Affairs Ministry
of Finance and Economic Planning
Mauritania: Mohamed Ould Lemrabott, Coonselor (PRSP)
M. Michel de la Taille, UNDPWT/LDC/SWG/IF/15
Page 55
Thailand: Dr. R. Ratnayake, Chief, Trade Policy Section, International Trade and
Industry Division, UN-ESCAP
Uganda: The Honourable Mr. Kweronda Ruhemba, Minister for Economic
Monitoring, Office of the President
United States: Mr. Michael Samuels, President, Samuels International Associates
Mr. Sarath Rajapatirana, Visiting Scholar, American Enterprise Institute
Zambia: Mr. James Fox, USAID Consultant for Zambia Trade Sector Round Table
WTO Members and Observers
Albania: Mara Adrian, Second Secretary, Permanent Mission in Geneva
Angola: Amadeu Alves Leitão Nunes, Commercial Counsellor, Permanent Mission in
Geneva
Argentina: Juan A. Marchetti, Secretary of Embassy, Permanent Mission in GenevaBangladesh: MD. Abdul Jalil, Minister of Commerce, Government of Bangladesh
M. Abdul Mannan, Minister (Eco.), Permanent Mission in Geneva
MD. Shahidullah Miah, Secretary to the Minister of Commerce
Shahidul Haque, Counsellor, Permanent Mission in Geneva
Brazil: Jorge Kadri, First Secretary, Permanent Mission in GenevaBurkina Faso: Ambroise Balima, Economic Counsellor, Embassy in Brussels
Biheouan Bertin Teby, Directeur Général du Commerce, Ministère du
Commerce, de la Promotion de l'Entreprise et de l'Artisanat
Canada: H.E. Mr. Jonathan Fried, Senior As sistant Deputy Minister, Department of
Finance, (G-7 Deputy for Canada) (Panelist)Mr. Peter McGuire, Department of Finance
Mr. Bill Singleton, CIDA
Ms. Patricia Malikail, Department of Foreign Affairs and International Trade
Ms. Adair Heuchan, Permanent Mission in Geneva
Mr. Terry Collins-Williams, Minister Counsellor and Acting Ambassador,Permanent Mission in Geneva
Gaston Grenier, Development Agriculture Expert, Canadian International
Development Agency
Cape Verde: Antonio Pedro Alves Lopes, Chargé d'affaires a.i., Permanent Mission in
Geneva
Colombia: Maria Eugenia Mesa, Asesor Comercial, Permanent Mission in GenevaDenmark: Mr. Albert Wright, Minister C ounsellor, Permanent Mission in Geneva
Mr. Erik Høeg, Head of Section, S.2, Permanent Mission in Geneva
Mr. Morten Lykke Lauridsen, Head of Secti on, N.4, Permanent Mission in
GenevaWT/LDC/SWG/IF/15
Page 56
Djibouti: Hassan Doualeh, Permanent Representative, Permanent Mission in Geneva
E.C.: Mr. Ignacio Garcia-Bercero, DG Trade, Brussels (Panelist)
Mr. A. Beviglia-Zampetti, DG Trade, Brussels
Mr. Ch. Wagner, DG Trade, BrusselsMr. R. Schlegelmilch, EC Permanent Delegation, Geneva
Ethiopia: Tadesse Woinshet, First Secretary, Permanent Mission in GenevaFinland: Ms. Katriina Kortteinen, Counsellor, International Economic Organizations
Unit
Mr. Pekka Puustinen, First Secretary, EU Coordination of DevelopmentCooperation Unit, Ministry of Foreign Affairs
Ms. Johanna Karanko, Second Secretary, Permanent Mission in Geneva
France: Pascal Dumas de Rauly, Secteur Développement, Finances – Direction
relations économique
Germany: Helge Hassold, First Secretary, Permanent Mission in Geneva
Barbara Edelmann, Intern, Permanent Mission in Geneva
Mr. Martin Michaelis-Seidler, Senior Programme Manager, German
Foundation for International Development (DSE)
Greece: Dimitrios Zomas, First Secretary, Permanent Mission in GenevaGuinea: Aminata Kourouma, First Secretary, Permanent Mission in Geneva
Haiti: Rénald Clérismé, Minister Counsellor, Permanent Mission in Geneva
Jean René Bordes, Technical Counsellor, Ministry of Economy and Finance
Iceland: H.E. Mr. Benedikt Jónsson, Ambassador, Permanent Representative of
Iceland
India: Rajesh Aggarwal, Counsello r, Permanent Mission in Geneva
J. Sri Raman, Attaché, Permanent Mission in Geneva
Italy: Mr. PierGiorgio Gawronski, Senior  Economic Advisor, Prime Ministers'
Office
Mr. Francesco Saraceno, Senior Economic Advisor, Prime Minister's OfficeMarco Cortinovis, Intern, Permanent Mission in Geneva
Jamaica: H.E. Mr. Ransford Smith, Ambassador, Permanent Mission in Geneva
Phillipa Davies, First Secretary, Permanent Mission in Geneva
Japan: H.E. Mr. Koichi Haraguchi,  Ambassador, Permanent Representative of Japan
(Panelist)
Mr. Yoichi Suzuki, Minister, Permanent Mission of Japan
Mr. Masahiro Yamashita, Senior Advisor, Macro Economics, Japan
International Cooperation Agency (JICA), (Panelist)Mr. Hiromi Yano, Counsellor, Permanent Mission in Geneva
Mr. Toshi Iijima, First Secretary, Permanent Mission in Geneva
Ms. Yuki Daijo, Specialized Assistant, Permanent Mission in GenevaWT/LDC/SWG/IF/15
Page 57
Kenya: Abdirizak A. Musa, First Secretary, Permanent Mission in Geneva
Korea, Rep.: H.E. Mr. Jae-Gil Lee, Ambassador, Deputy Permanent Representative to the
WTO, Permanent Mission in Geneva
Mr. Kyong-Lim Choi, First Secretary, Permanent Mission in GenevaMr. Kyoung-Ha Woo, First Secretary, Permanent Mission in Geneva
Lebanon S.E. M. Walid A. Nasr, Ambassador, Permanent Representative, Permanent
Mission in Geneva
M. Johnny Ibrahim, First Secretary, Permanent Mission in Geneva
Madagascar: Joseph Rasolofonirina, Administrateur Civil, Ministère du Commerce et de la
Consommation
Malawi: Mr. Thoko M. Banda, Deputy Ambassador, Embassy in Bonn, Germany
Mr. Peter Schuil
Maxwell M. Mkwezalamba, Principal Secretary (Economic Affairs),Ministry of Finance and Economic Planning
Mauritania: Mohamed Ould Lemrabott, Conseiller, (PRSP),
à la lutte contre la pauvreté et à l'insertion
Mohamed Saleck Ould Mohamed Lemine, Ambassador, Permanent Missionin Geneva
Idrissa Oumar Kane, Premier Conseiller, Permanent Mission in Geneva
Mauritius: Ravindranath Sawmy, Second Secretary, Mission in Geneva
Morocco: Younes Tijani, Premier Secretaire, Permanent Mission in Geneva
Netherlands: Ms Margriet Kuster, Senior Policy Advisor, Ministry of Foreign Affairs
Mr. Jan Baade, Senior Policy Advisor, Ministry of Foreign Affairs
Mr. Jennes de Mol, First Secretary, Permanent Mission in Geneva
Mr. Jan-Peter Mout, First Secretary, Permanent Mission in Geneva
Pakistan: Yousaf Junaid, Commercial Secretary, Permanent Mission in Geneva
Paraguay: Roberto Recalde Gonzalez, Consejero, Permanent Mission in GenevaPoland: Zbigmiew Moldowa, Head of  WTO Unit, Ministry of Economy
Krzyztof Januzzek, First Secretary, Permanent Mission in Geneva
Portugal: Ms. Sónia Melo E Castro, First Secretary, Permanent Mission in GenevaRussian, Fed.: Mrs. Olga Shishaeva, First Secretary, Permanent Mission in Geneva
Mr. Sergey Kogalov, Attaché, Permanent Mission in Geneva
South Africa: Matseliso 'Mei, Director of Economic Policy, Ministry of Development
Planning
Spain: Joaquim Bellmunt Roig, Consejero, Permanent Mission in Geneva
Sri Lanka: Mr. K.J. Weerasinghe, Minister (Economic & Commercial), Permanent
Representative to the WTOWT/LDC/SWG/IF/15
Page 58
Sudan: H.E. Dr. Ibrahim Mirghani Ibrahi m, Ambassador, Permanent Representative
Mr. Mohamed Yousif Abdalla, Counsellor, Permanent Mission in Geneva
Mr. Ali A. Mahmoud, Counsellor, Permanent Mission in Geneva
Mr. Christopher L. Jada, Second Secretary, Permanent Mission in Geneva
Tanzania: H.E. Mr. Ali Mchumo, Ambassador, Permanent Representative (Moderator)
Mrs. N.P. Kadege, Minister Plenipotentiary, Permanent Mission in Geneva
Mark Charles Temy, Ag. Assistant Commissioner for Macroeconomic Policy
Ministry of Finance
Thailand: Mr. Duangarthit Nidhi-u-Thai, First Secretary, Permanent Mission in GenevaTunisia: Chiraz Ben Abdallah, Secrétaire des Affaires Etrangères, Permanent Mission
in Geneva
Turkey: Mustafa Özcan, Third Secretary, Permanent Mission in Geneva
Yüksel Yucekal, Second Secretary, Permanent Mission in Geneva
United Kingdom: Eleanor Fuller, First Secretary, Permanent Mission in Geneva
Susan Prowse, Senior Economic Advisor
Tom Pengelly, DFIDMark George, Consultant, DFID
United States: Roger Freeman, Director, Deve loping Country Issues, WTO Affairs Officer
USTR, Washington
Patricia Nelson-Douvelis, Chief, De veloping Country Trade Division, U.S.
Department of State
Steve Hadley, Director, Office of Emerging Markets, (Panelist)
David Cowles, Associate Assistant Administrator, Global Bureau Center
for Economic Growth & Agricultural Development
Alicia Greenidge, Assistant Deputy Chief of Mission, Permanent Mission in
Geneva
Venezuela: H.E. Mr. Werner Corrales Leal, Ambassador, Permanent Representative,
Permanent Mission in Geneva
Mr. Oscar Hernandez, Minister Counsellor, Permanent Mission in Geneva
Miss. Elbey Borrero, Second Secretary, Permanent Mission in Geneva
Miss. Luisa E. Bernal, Official, Permanent Mission in Geneva
Zimbabwe: Dr. Nkosana Moyo,  Minister of Industry and International Trade, (TBC)
Boniface Guwa Chidyausiku, Ambassador, Permanent Mission in Geneva
B. Mutetwa, Minister Counsellor, Permanent Mission in Geneva
Development Agencies
Canadian International Development
        Agency (CIDA): Mr. Bill Singleton, CIDA
Department for International
        Development (DFID): Ms. Susan Prowse, Senior Economic AdvisorWT/LDC/SWG/IF/15
Page 59
Development Assistance
        Committee (DAC/OECD): Mr. Richard Carey, (Panelist)
Ms. Ebba Dohlman
Mr. Henri-Bernard Solignac-Lecomte
German Foundation
  for International
  Development (DSE): Mr. Martin Michaelis-Seidler, Senior Programme Manager
Ministry of Foreign Affairs of Japan
  and Japan International Cooperation
  Agency (JICA): Mr. Masahiro Yamashita
Swedish International Development
Agency (SIDA) Elisabeth, Programme Manager
United States Agency for International
  Development (USAID): Mr. Steve Hadley, Director, Office of Emerging Markets, 
(Panelist)
Mr. David Cowles, Associate Assistant Administrator,
Global Bureau Center for Economic Growth & Agricultural
Development
Norwegian Development Agency: Mrs Elisabeth Sollner, Senior Advisor
Regional Economic Commissions/ Secretariats
Economic Commission for Asia and
        the Pacific (ESCAP): Dr. Ravi Ratnayake, Trade Policy Section, International
Trade and Industry Division
Economic Commission for
        Africa (ECA): Dr. Sa m Cho, Economic Commission for Africa
Forum Secretariat: Mr. Peter Williams, Forum Representative to the WTOAgency for International Trade Information
        and Cooperation (AITIC): Mrs. Esperanza Durãn, Director
Commonwealth Secretariat: Mr. Vinod RegeAfrican, Caribbean and Pacific
  Group (ACP): H.E. Mr. A.G. Zoung uere-Sokambi, Ambassador, Central
African Republic, Chairman of the of the Committee of
Ambassadors to the ACP in Brussels
Development Banks
African Development Bank: Mr. Samuel K. Gayi, Principal Planning Economist, Strategic
Planning Division, African Development BankWT/LDC/SWG/IF/15
Page 60
Asian Development Bank:
Islamic Development Bank:Inter-American
  Development Bank:
International Organizations
International Monetary Fund
(IMF): Grant Taplin, Director, IMF Office, Geneva
Anne McGuirk, Assistant Dir ector, Trade Policy Division, 
Policy Development and Review Department
International Trade Center
(ITC): Martin Dagata, Director, Technical Cooperation Division,
(Panelist)
Anant Vijay
Pacific Islands Forum Secretariat
(FORSEC): Peter Williams, Special Advisor
Organization of African Unity
(OAU): David F. Luke, Senior Economist, Permanent Mission in 
Geneva
Sophie Kalinde, Ambassador, Permanent Mission in Geneva
United Nations Conference on Trade
  and Development (UNCTAD): Philippe Brussi ck, Chief, Competition, Law and Policy and 
Consumer Protection Section, (Panelist)
John Cuddy, Director, International Trade Division, 
(Panelist)
Charles Gore, Senior Economic Affairs Officer, Office of theSpecial Coordinator for the LDCs, Landlocked and Island 
Developing Countries, (Panelist)
Marcel Namfua, Interregional Adviser, Office of the Special
Coordinator for the LDCs, Landlocked and Island
Developing Countries, (Panelist)Anh-Nga Tran-Nguyen, Head, Investment Issues Analysis
Branch, Division on Investment, Technology and Enterprise
Development
United Nations Development
  Programme (UNDP): Graham Chipande, Senior Economist, Gambia
Eimi Watanabe, Assistant Administrator and Director of the 
Bureau of Development Policy
Mr. de la Taille, UNDP Resident Rep. Mauritania
Georges Chapelier, Principle Technical Advisor,Management Development and Governance Division, UNDP
Penelope Andrea, Liaison OfficerWT/LDC/SWG/IF/15
Page 61
World Bank: Ataman Aksoy, Economic Advisor, Economic Policy,
Development Prospects Group, (Panelist)
Uri Dadush, Director, Economic Policy and Development 
Prospects Group, (Panelist)
Kemal Dervis, Vice-PresidentAlfredo Sfeir-Younis, Special Representative to the WTO
Fabrizio Zarcone, Economist
World Health Organization
  (WHO): Ms. Debra J. Lipson, Heal th Policy Analyst, Department of
Health in Sustainable Development
Rapporteur: Chiedu Osakwe
Editor: Maika Oshikawa
Editor: Sajal Mathur
Editor: Zainab MchumoWT/LDC/SWG/IF/15
Page 62
ANNEX V
V. PAPERS/LEAD PRESENTATIONS
H.E. Mr. MD Abdul Jalil, Minister of Commerce, Bangladesh (LDCs' Coordinator)
Integrating LDCs into the Global Economy: Trade, Finance and Development Perspectives
H.E. Mr. Jonathan Fried, Senior Assistant Deputy Minister, De partment of Finance, Canada, (G-7
Deputy for Canada)
Importance of Integrating Trade, Finance, and Development Perspectives
Hon. Kweronda Ruhemba, Minister for Economic Monitoring, Office of The President, Uganda.
The Necessity of Coordinated Approaches by Multilat eral Agencies and Bilateral Donors to Technical
Assistance and to Development, Finance and Trade Policies, Programmes and Projects
H.E. Dr. Nkosana Moyo,  Minister for Economic Monitoring, Office of The President, Uganda
How Can We Build Trade Priority Areas of Action into National Plans for Development and Poverty
Reduction?
H.E. Mr. Koichi Haraguchi , Ambasador Permanent Representative of Japan, Geneva
A Policy Framework for Trade-Related Technical AssistanceWT/LDC/SWG/IF/15
Page 63
PRESENTATIONS:  PANEL A
Richard Eglin,  Director Trade and Finance Division, WTO Secretariat.
Mainstreaming and Economic Policy Reform
Considerations for the Least-Developed Countries,
their Trading Partners, and the WTO
The failure of economic globalization to ignite strong trade growth in the least-developed
countries (LDCs) is a major concern for the WTO.   LDCs are a large group of its shareholders –
almost 30  per cent  of its Members – yet the record of their trade performance and their participation in
the trading system makes depressing reading.  Their share of world trade is disproportionately small,and continues to decline
†††.  There is little sign of them diversifying successfully away from primary
sector exports and low value-added manufactures into goods and services that offer prospects of more
rapid trade growth.  Their annual export earnings are volatile, and hopelessly insufficient to help pay
for imports that they need to help modernize th eir economies.  Foreign investment passes them by‡‡‡.
Their trade-related institutions and infrastructure ar e inadequate to cope with the demands of highly
competitive global markets, and ill-equipped to transl ate their WTO rights into tangible trade benefits
and tools for their economic development.  And they lack trained officials to press their case through
the WTO's institutional machinery and through trade negotiations to help correct all of this§§§.
That the LDCs remain committed to the WTO, and optimistic that there are better times
ahead, is a tribute to their patience****.  They are not about to give up on the WTO, and the WTO is
not about to give up on them††††.  But new ideas are called for.
Mainstreaming
"Mainstreaming" trade into development policies is one of them.  For the WTO, its novelty
lies in looking beyond the traditional GATT/WTO paradigm on trade and development, and seeingrules-based trade policy reform as a means to an end rather than an end in itself
‡‡‡‡.  Disillusion with
trying to squeeze development provisions into the trading system through various forms of Special
and Differential Treatment§§§§ – most of which have a poor track record***** – has prompted questions
about how trade and the trading system can be made  to work more effectively for each country's
programme of economic development and poverty eradication.
One of the main challenges posed by mainstreaming is to marry the two different cultures of
trade policy and development policy.  The legal and political focus of the WTO on trade policyreform is driven by a highly centralised and formal process – negotiation and implementation of the
WTO Agreements – and for LDCs it is only the thin end of a long wedge.  The thick end of the wedge
                                                     
††† UNCTAD, The Least Developed Countries, various years.
‡‡‡ UNCTAD, World Investment Report, various years.
§§§ Blackhurst, Lyakurwa and Oyejide (2000); 15 Sub-Saharan Africa countries have no permanent
WTO representation in Geneva at all.
**** See, for example, Libreville 2000, Final Communiqué of African Trade Ministers, WTO, Foucs,
November 2000.
†††† See WTO Ministerial Declarations, 1996 and 1998.
‡‡‡‡ See, for example, Eliminating World Poverty:  Making Globalisation Work for the Poor, UK
Government White Paper, 2000.
§§§§ The main ones are (a) more flexibility under the rules, (b) non-reciprocity in negotiations, and (c)
preferential tariffs.
***** Hudec (1987).WT/LDC/SWG/IF/15
Page 64
involves a host of complementary policy reforms in areas outside the purview of the WTO, and costly
investments in trade-related institutions, infrastructure, and human resources, which are undertaken at
the discretion of each LDC – if at all – in the context of its own, comprehensive development
programme.
Mainstreaming will require adjustments from both cultures if they are to work together to
produce a more coherent approach towards trade and development for the LDCs†††††.  On the one
hand, the trading system is being asked to take on board the costs and difficulties of trade-related
policy reforms and capacity-building in LDCs when formulating its rules and procedures.  On the
other, the LDCs and their development partners are being asked to incorporate technical and financial
support for trade policy reform into the development process much more deliberately than in the past.
Neither adjustment will come easily.  Discussion of the WTO's "Implementation" agenda last yearmade little headway towards finding agreement on how best to apply the flexibility of WTO
procedures to help countries that are encountering problems in meeting their legal commitments.  And
questions about the relevance of open trade policies for economic development and poverty
alleviation, as well as about the value of committing scarce resources to trade-related capacity-
building in the face of competing demands from more familiar causes such as health care andeducation, continue to generate controversy among development experts
‡‡‡‡‡.
In finding an accommodation, it is important to respect core responsibilities.  It is not the
WTO's role to become involved in the delivery of trade-related support and capacity-building, beyond
the rather narrow compass of technical assistance for implementation of WTO Agreements.  TheWTO has no expertise or experience outside this area, and it should not set about trying to gain any.
The way forward lies in the WTO cooperating more closely with organizations that are qualified to
provide hands-on assistance to the LDCs.  The Integrated Framework was designed with exactly that
objective in mind.
The principal vehicle through which the WTO can contribute directly to mainstreaming is its
rules and their related procedures, in particular transitional arrangements for developing and least-
developed countries to implement their WTO commitments.  Thought will need to be given to how to
make room for mainstreaming to take place.  The current transitional arrangements were constructed
somewhat in haste at the end of the Uruguay Round, as the simplicity of the result suggests:  five
years of transition for developing countries for most things, and ten for the least-developed.  That idea
will need refining for the next trade Round, so as to take account of  the individual circumstances anddevelopment priorities of developing and least-developed country Members;  to address the
importance of the proper timing and sequencing of trade reforms, in-and-of themselves and in
conjunction with other policy and regulatory reforms;  to support implementation through enhanced
Trade Policy Review (TPR) surveillance;  and to address problems more effectively through
Committee work, in collaboration with those outsid e the WTO who are directly involved in trade-
related support and capacity-building.  These are core mainstreaming issues for the WTO and its
least-developed country Members to reflect on.
The need for a policy framework
Mainstreaming trade into development for LDCs, with its connotations of increased financial
and technical support to help them build trade-re lated capacity, does not reduce the need to get the
economic policy fundamentals right.  Money spent on trade-related capacity-building, in any country,
in the absence of a sound trade, macroeconomic, and regulatory framework is likely to be money
                                                     
††††† "Coherence" is one of the WTO's five core functions.  See Marrakesh Agreement Establishing the
WTO, Article III:5, and Marrakesh Declaration on the Contribution of the WTO to Achieving Greater
Coherence in Global Economic Policy-making.
‡‡‡‡‡ Rodrik (1999), Finger and Schuler (2000).WT/LDC/SWG/IF/15
Page 65
wasted – money that would indeed be better directed to health care, education, and other pressing
development priorities.  Equally, financial support for trade-related capacity-building is no substitute
for improving the external policy environment that LDCs confront, in particular removing restrictions
and distortions affecting exports of those goods and services in which they have a natural comparative
advantage.  Mainstreaming needs a policy framework.  Its success will depend on improvementsbeing made to the current one, by the least-developed countries and their trading partners alike.
It is intended that the main institutional vehicle for mainstreaming trade into development will
be the country-led Poverty Reduction Strategy process that the IMF and the World Bank agreed, in
September 1999, to place at the heart of their lending programmes for the world's poorest countries.
This will help support the establishment of a coherent framework of policies, particularly
macroeconomic policies, for each LDC involved.  What will almost certainly be missing from thatframework, however, is attention to the external trading environment that LDCs confront.  It is
appropriate, therefore, that this should be the first focus for attention in the WTO.
The external trading environment for LDCs
Many countries have more cause to worry about damage caused by their own trade policies
than by those of their trading partners, but the LDCs are more vulnerable to the external economic
environment than are other countries.  They lack surplus resources to help insulate them against hard
times and external shocks, and their access to international capital markets is very constrained.  In
addition, they are more poorly equipped to deal with trade restrictions and distortions in their mainexport markets than are other countries, because a host of other domestic policy and institutional
weaknesses inhibit their ability to switch resources into less restricted export sectors – even if they
could, or should, given their natural comparative advantage.
The market access barriers facing exports of goods and services from the least-developed
countries have been surveyed extensively, in the WTO and elsewhere
§§§§§.  Given the various
preferential arrangements under which LDCs trade into their major export markets, principally the
European Union and the United States, the conclusion which is often drawn is that market access is
not the main problem – the main problem is su pply-side constraints which prevent LDCs from
producing sufficient goods and services of high enough quality to take advantage of the access
opportunities available to them.
Whether or not it is the main problem is not really the point.  Market access remains a
significant problem for many LDCs.  Eloquent testimony to that effect was provided in a survey of
private business opinion in LDCs carried out in 1997 by the International Trade Centre (ITC) for the
WTO High-Level Meeting on Integrated Initiatives for the Least-Developed Countries' Trade
Development .  Market access restrictions, and inadequate information about market access conditions
and opportunities, were identified as the most important bottlenecks to international business
development in LDCs after lack of efficient trade support services******.
The most recent detailed WTO survey of the market access restrictions facing LDCs dates
from the High-Level Meeting††††††.  At that time, the overall, unweighted, average, applied tariff
facing the LDCs' principal exports into their twenty-three main export markets was 10.6 per cent‡‡‡‡‡‡.
The average was 1.8 per cent in their developed country export markets, and 14.5 per cent in their
developing country export markets.  As for quantitative restrictions and other non-tariff
                                                     
§§§§§ For example, WTO (1997), OECD (1997), WTO (1998), World Bank (2001).
****** WTO (1997a).
†††††† WTO (1997).
‡‡‡‡‡‡ The twenty three markets accounted for 95 per cent of LDC exports in 1995.WT/LDC/SWG/IF/15
Page 66
measures§§§§§§, based on a measure of frequency of application, LDCs had a 6.2 per cent probability
that their exports would encounter some form of barrier in their main developed country export
markets, and a 16.5 per cent probability in their main developing country export markets.  The
products for which the incidence of non-tariff measures was highest correlated closely with those
where the level of tariffs was also high in both their developed and their developing country markets.In other words, even assuming that the product "Mad e in an LDC" could get onto the shelves of the
average WTO Member's supermarket in 1997, it was subject to a ten per cent tax at the check-out that
was not levied on competing domestic products.
Quantitative restrictions and other non-tariff measures create a particularly serious obstacle to
exporters from LDCs, because of their more limited means of gaining information about the measures
and meeting the procedural requirements that are involved.  The same goes for origin requirements inthe case of tariff preferences.  From the LDCs' perspective, the general rule about overseas market
access restrictions is that if there are to be any at all, the simpler and more transparent they are, the
better.
Since the High Level Meeting  in 1997, and in line with its conclusions, a number of WTO
Members have notified market access improvements in favour of the LDCs.  The WTO has not yet
conducted a detailed analysis of these improvements.  Anecdotal evidence suggests, however, that the
problem is still far from being resolved.  Amongst the Quad countries, for example, only 1.2 per cent
of tariff lines are subject to non-tariff barriers, yet most of these barriers are found in agriculture and
in textiles and clothing, which are products of primary export interest to the LDCs and for whichpreferential access arrangements are still by no means comprehensive
*******.  In the United States,
while only 311 of 5,000 tariff lines are above 15 per cent – the average MFN tariff rate for these tariff
lines is 21 per cent, and the preferential rate for the LDCs is 18 per cent – yet 15 per cent of LDC
exports to the United States face these tariffs†††††††.  And the result of current research in the World
Bank suggests that scrapping peak tariffs in the Quad countries could lead to an increase in LDCexports of $2.5 billion a year, equivalent to 11 per cent of their annual export earnings currently
‡‡‡‡‡‡‡.
Clearly, there is still much more that the LDCs' trading partners can do.
Today, LDCs still depend on exports of a narrow range of largely unprocessed primary
commodities and raw materials.  These are susceptible  to price volatility on world markets.  Their
price and income elasticity of demand is low.  And their growth has been far more sluggish than
world trade growth overall.  This is one of the main factors hindering the LDCs' export performance.
It also severely limits the stimulus that the export  sector can provide to the domestic economy through
backward linkage activities.  As has been suggested repeatedly in the past, the diversification of their
economies and their exports, especially into higher value-added manufactures, is seen as the most
promising long-term solution to their increased participation in world trade.
It is from that perspective, as much as from the current status quo , that improvements in
market access for the LDCs should be considered.  Their need for open and predictable access to
export markets, on a more geographically diversified basis than is the case at present, will increase as
successful policy reforms and capacity-building le ad them to higher productive efficiency and
economic diversification.  In that respect, for the LDCs preferential access is no substitute for boundMFN tariff reductions in products of primary export interest to them.
Policy reform in LDCs
                                                     
§§§§§§ Import quotas, tariff quotas, non-automatic import licensing, prior authorization, import
monitoring and surveillance, state monopolies, state trading, and canalised imports.
******* Finger and Schuknecht (1999).
††††††† Hoekman, Ng, and Olarreaga (2000).
‡‡‡‡‡‡‡ Hoekman, Ng, and Olarreaga (2001).WT/LDC/SWG/IF/15
Page 67
The least-developed countries' ability to profit from the overseas market access opportunities
available to them is heavily conditioned by domestic structural and policy-based constraints to
expanding their exports.  "Mainstreaming" offers a means for the LDCs' development partners to
assist them to identify, prioritise, and tackle structural supply-side constraints – inadequate human andinstitutional capacity, and trade-related infrastructure.  Each LDC government needs to be fully
committed to, and engaged in, this process – it has to own the mainstreaming exercise if that exercise
is to succeed.  But where the need for political commitment in LDCs is probably greatest, and the task
most difficult, is correcting the domestic policy-based constraints to increased efficiency and
competitiveness.
Rich countries can, and do, trade-off economic efficiency in exchange for their political and
social values.  Europe's Common Agricultural Policy is a case in point.  It is one of the many harsh
facts of life facing poor countries that they do not have that luxury.  They cannot afford the costs of
inefficient resource allocation, nor the reduction of inflows of investment and technology that results
from protecting uncompetitive domestic producers
§§§§§§§.  Yet that does not make the job for them of
overturning entrenched commercial or political intere sts with a stake in protecting current policies any
easier than it is in rich countries.
In fact their task is more difficult.  In rich countries, the agenda for the next trade Round can
be discussed in reasonably comfortable isolation from other economic policy issues.  In LDCs, the
trade policy agenda is inseparable from the rest of the economic policy agenda.  Tariff reductions, forexample, can have significant fiscal effects in LDCs because of their dependence on trade taxes
within a narrow tax base, and these are linked therefore to macroeconomic considerations.  Tax
reform needs to be considered alongside tariff reduction
********.  More generally, the success of trade
policy reforms can depend critically on complementary, and often costly, policy reforms and on
relatively sophisticated and functioning domestic markets if these reforms are to produce a positiveresponse.  "Destroying bad jobs in order to be able to create better new ones" may be the academically
correct (although not politically saleable) slogan to describe trade liberalization in the rich countries,
but where domestic markets do not function well enough to allow that adjustment process to work its
way through the economy, out of inefficient protected activities and into more competitive and
productive ones, the result may turn out to be "destroying bad jobs and creating unemployment",
which is neither politically saleable nor likely to contribute to poverty alleviation
††††††††.
The task of combining trade policy reform with complementary domestic economic reforms
that faces LDCs is enormous.  In the example given above, a variety of factors can contribute to the
failure of jobs to be created, from government regulations, to rigidities in labour markets, to
macroeconomic imbalances, to lack of access to capital, and so on. Do we know anything about what
needs to be done first, and in particular whether tr ade liberalization should figure in the vanguard of
the reform effort?
Recently, the answer to that question has become more controversial than it used to be.  Over
many years, a large number of cross-country empirical studies have documented a strong relationship
between openness to trade and growth‡‡‡‡‡‡‡‡.  The challenge that has been lodged against them
concerns (by and large) the direction of the causality that is at play:  do more open economies grow
faster, as has been the conventional wisdom until now, or do fast growing economies become more
open ex post  as the size of the domestic market begins to constrain their growth prospects?  If it is the
latter, the implication drawn might be that LDCs would be better advised to devote their scare
                                                     
§§§§§§§ Stiglitz (2000).
******** IMF (1999).
†††††††† Stiglitz (2000).
‡‡‡‡‡‡‡‡ World Bank (2001), Box 2.1.WT/LDC/SWG/IF/15
Page 68
resources and domestic political capital to changing policies that will raise the share of investment in
GDP and maintaining macroeconomic stability, than to engaging in trade liberalization§§§§§§§§.  If it is
the former, trade liberalization is an essential element early on in a reform programme, so that scarce
investment resources do not get locked up in inefficient protected activities, from which it becomes
progressively harder to release them because of the vested commercial and political interestsinvolved.
For LDCs, the most important practical conclusion to be drawn from the debate at this stage is
probably that other policy distortions need to be tackled simultaneously if trade liberalization is to
yield its promised benefits.  There is a lesson in that too for the WTO.  Sufficient time must be
provided to the LDCs to implement their WTO commitments, in the context of a programme of
broader economic reform, if those commitments are to yield tangible benefits to the LDCs in terms of
economic development and poverty eradication.
The conclusion is borne out by the positive experience of many developing countries since
the late-1980s which have applied a cocktail of economic reform policies to foster stable
macroeconomic conditions, openness to trade, and moderate size of government
*********.  Trade
liberalization and technological change have led to a pronounced increase in openness to competition
of these countries during the 1990s. Privatization and more intense competition in domestic markets
have increased their incentive to find lower-cost in termediate inputs and to search for new markets
abroad.  Technological improvements, many imported from abroad directly or bundled up in FDI,
have reduced their communications and transportation costs.  And through unilateral liberalizationand regional and multilateral trade agreements, they have greatly reduced their trade restrictions and
distortions.  At the same time, their macroeconomic policies have become more prudent, keeping
inflation low and fiscal deficits in check.  Their balance-of-payments, and particularly current account
deficits have become more manageable, and exchange restrictions on current account transactions
have been reduced.  With these changes, many developing countries have improved their growthprospects, and their tradeable goods and service sectors have considerably increased their potential to
contribute to that growth.
In reviewing this experience of the developing countries during the 1990s, the World Bank
finds that in certain respects, low income countrie s have participated in the general move towards
creating a more favourable economic policy environment for growth to take place.  In the case of
tariffs, for example, the average tariff rate for low income countries fell from almost 45 per cent in theearly 1980s to 20 per cent in the late 1990s, only slightly higher than the average for the middle-
income countries.  Even so, notes the World Bank, in spite of significant progress, many of the
poorest countries have not put in place the policies necessary to raise living standards by improving
(or even maintaining) export shares in traditional markets and encouraging rapid diversification.
The Bank points to two particular areas of economic policy-making which, along with weak
export infrastructure, inadequate ancillary export services, and high transport costs – often in part also
the result of policy shortcomings – remain important impediments to integration of many of the
poorest countries in to the world economy.  One is exchange rate instability and overvaluation.
Appreciated real exchange rates and high real exchan ge rate volatility have often been associated with
a muted export response to trade liberalization and other reform measures.  The second is that
institutional weaknesses, such as the absence of effective duty exemption/drawback programmes,
coupled with the need to use tariffs on intermediate and capital goods as a revenue source, have acted
as an effective tax on exports in many of the poorest developing countries and discouraged investment
in the export sector
†††††††††.
                                                     
§§§§§§§§ Rodrik (1999).
********* World Bank (2001).
††††††††† See also Yeats and others (1997).WT/LDC/SWG/IF/15
Page 69
Bibliography
Blackhurst R., W. Lyakurwa and A. Oyejide (2000) , "Options for Improving Africa's Participation in
the WTO", The World Economy , 23, 491-510
Edwards, S. (1997), "Openness, Productivity and Growth:  What Do We Really Know", Working
Paper 5978, National Bureau of Economic Research, Cambridge, Mass.
Finger, J.M. and L. Schuknecht, (1999), "Market Access Advances and Retreats:  the Uruguay Round
and Beyond", Policy Research Working Paper, World Bank, Washington D.C.
Finger, J.M. and P. Schuler (2000), "Implementation of Uruguay Round Commitments:  The
Development Challenge", The World Economy , 23, 511-526
Hoekman, B., F. Ng, and M. Olarreaga (2000), "Problems Created by Protection in the Markets for
Developing Country Exports",  World Bank, Washington D.C.
Hoekman, B., F. Ng, and M. Olarreaga (2001), "Tariff Peaks in the Quad and Least Developed
Country Exports", World Bank, Developm ent Research Group, Preliminary Draft
Hudec, R. (1987), Developing Countries in the GATT Legal System, Trade Policy Research Centre,
Gower, LondonIMF (1999), "Revenue Implications of Trade Li beralization", Occasional Paper 180, Washington D.C.
OECD (1997), "Market Access for the Least-Developed Countries:  Where are the obstacles?",
TD/TC(97)19, Paris
Report of the Task Forces on Bangladesh Development Strategies for the 1990s (3 Volumes),
Volume 2, "Managing the Development Process", (1991), Dhaka, University PressRodrik, D. (1999), The New Glob al Economy and Developing Countries:  Making Openness Work,
Overseas Development Council, Johns Hopkins University Press, Washington D.C.
Stiglitz, J. (2000), "Two Principles for the Next Round or, How to Bring Developing Countries in
from the Cold", The World Economy , 23, 437-454
Yeats A., with A. Amjadi, U. Reincke, and F. Ng, (1997), Did Domestic Policies Marginalize Africa
in International Trade?, Directions in Development, World Bank, Washington D.C.
World Bank (2000), Can Africa Claim the 21st Century?, Washington D.C.
World Bank (2001), Global Economic Prospects and the Developing Countries, Washington D.C.
WTO (1997), WT/LDC/HL/14, "Market Access for Least-Developed Countries", GenevaWTO (1997a), WT/LDC/HL/3, "Principle Bottlenecks to International Business Development and the
Related Technical Cooperation Needs of Least-Developed Countries:  A Business SectorPerspective", Geneva
WTO (1998), WT/COMTD/LDC/W/11/Rev.1, "Market Access for Exports of Goods and Services of
the Least-Developed Countries:  Barriers and Constraints", GenevaWT/LDC/SWG/IF/15
Page 70
Frédéric Jenny,  Chairman, WTO Working Group on Trade and Competition Policy and Conseil de
la Concurrence, France and Robert Anderson,  Counsellor, Intellectual Property Division WTO
Secretariat
Internal Reform as a Necessary Condition for Realizing the Benefits of Trade Liberalization:  the
Case of Regulatory Reform and Competition Policy
I. INTRODUCTION
The importance of regulation and competition policy for international trade policy is
increasingly recognized.  Depending on their content and application, both can make trade easier or
more difficult.  This accounts for the acceptance of both as important and legitimate subjects for studyin the framework of the WTO, even if there is not, as yet, agreement on whether the latter is ready for
comprehensive rule-making.  It is also increasingly recognized that both regulation and competition
policy can be instrumental in the process of economic development.  This is reflected, for example, in
recent editions of the World Development Report as well as in ongoing work at UNCTAD and, very
much, in the discussions that have taken place over the past three years in the WTO Working Groupon the Interaction between Trade and Competition Policy.  What is perhaps less clear, at least for
some participants, is the role that the multilat eral trading system should play in promoting sound
approaches to regulation and competition policy and the extent to which it should be explicitly
concerned with development-related objectives as distinct from trade liberalization per se .  This is a
significant conundrum for the system since, to some extent at least, the case for new initiatives on
these subjects in the framework of the WTO rests on development-related as opposed to "pure" trade
liberalization considerations.
Arguably, the concept of mainstreaming provid es the missing link that reconciles trade
liberalization and the role of the system in promoting microeconomic policy reforms that areimportant for development-related purposes.  Mainstr eaming refers to the process of integrating trade-
related initiatives into the overall matrix of national development plans and poverty-reduction
strategies.  It recognizes both that trade liberalization per se  can make a major contribution to
development and income growth and that trade-related initiatives can foster and reinforce more
specific development-related goals.  More broadly, the concept of mainstreaming reminds us that
trade and trade liberalization ultimately are not undertaken for their own sake, but for the contribution
they make to higher incomes, poverty alleviation and the expansion of socio-economic opportunities –in a word, as a contribution to development.
This paper explores these relationships with reference to the particular case of regulatory
reform and competition policy.  It takes as a point of departure the premise that internal reform is
often a necessary pre-condition for realizing the potential benefits of trade liberalization for growthand development.  That is, in many cases, countries will not be well-poised to take advantage of the
potential benefits of trade liberalization in expanding incomes and opportunities unless they
simultaneously take steps to reduce costs and enhance the efficiency of infrastructure sectors such as
telecommunications and transportation; eliminate artificial restrictions on entry, exit and pricing in
industries where they exist; and otherwise establis h and strengthen incentives for innovation, the
creation of efficient management structures and productivity improvement.  As such, trade
liberalization and domestic reform are intimately linked.  There should, consequently, be no objection
to new initiatives in the system solely on the ground that they are not concerned with explicit
regulation of the conditions of trade.  The test, according to this view, should be whether new
initiatives make a genuine contribution to development-related objectives and are reasonably relatedto ensuring that the benefits of trade are actually realized by the participating countries in the system.
More specifically, Part II of this paper explores the role of regulation and regulatory reform as
elements of the domestic restructuring that may be necessary to take advantage of the opportunitiesWT/LDC/SWG/IF/15
Page 71
afforded by trade liberalization.  It makes the case that efficient regulation and, where necessary,
reform, can be reinforced both by trade liberalization and by the establishment of effective national
competition agencies.  A further complication is that regulatory reform without a strong national
competition policy often will not be sufficient to ensure the efficient performance of markets.  This
begins to reveal the extent of inter-linkages among these policies.  Part III discusses the role ofcompetition policy in relation to economic development more broadly.  It draws, among other
sources, on work that has already been completed in the WTO Working Group on the Interaction
between Trade and Competition Policy.  Part IV broaches the role that international commitments can
play in supporting welfare-enhancing internal reforms and effective national competition policies in
developing countries, by helping to constrain the role of domestic constituencies that may be
unenthusiastic about such reforms.  The objective is not to defend a particular position in the debate
on the need for a multilateral framework on compe tition policy but to draw out some of the
underlying linkages between competition policy, regulatory reform, trade and the development
process.  Part V provides concluding remarks.
II. REGULATORY REFORM AS AN ELEMENT OF DOMESTIC RESTRUCTURING
In contemplating the subject of regulatory reform as an underpinning of domestic
restructuring, it is first necessary to emphasize that regulation in both developed and developing
economies can and often does serve valid public purposes.  For example, it is well-established that
regulation can be an efficient response to market failures such as imperfect information, the existence
of a natural monopoly (a situation in which a market is most efficiently supplied by a single firm) andother such problems.
Nonetheless, it is equally important to recognize that, often notwithstanding its avowed aims,
regulation often thwarts rather than promotes efficiency and economic welfare.  This is likely to be
the case, for example, where it imposes restrictions on entry, exit and/or pricing in non-naturalmonopoly industries.  In fact, experience in both developed and developing countries shows that, in
many cases, rather than having regulation imposed on them for the public benefit, incumbent firms
have often sought regulation for their own benefit, for the purpose of limiting entry into the industry
and helping them to enjoy higher prices for their products.
‡‡‡‡‡‡‡‡‡  Recognition of the significance of
such conduct as a formidable barrier to economic development dates back at least to Krueger (1974),
and is affirmed in recent analyses by the World Bank and other development-related agencies.§§§§§§§§§
In the light of this, efforts to remove inefficient regulatory restrictions and establish economic
governance and markets are increasingly recognized as being central to the process of development
and growth.**********
The role of regulation, the need for reform and the role that the multilateral trading system
can play in this area have been discussed extensively in the WTO Working Group on the Interactionbetween Trade and Competition Policy, since the inception of the Group in 1997.  A number of
delegations have shared with the Working Group their national experience with deregulation and the
benefits which flowed from it.  According to some  delegations, and a related study by UNCTAD, this
experience has shown conclusively that a commitmen t to competitive markets, rather than regulatory
approaches, as the primary instrument of economic governance yields major benefits for competition,trade and economic welfare.
††††††††††  Note has also been taken that regulation is nonetheless needed in
certain situations, for example in genuine situations of natural monopoly.  However, the extent of
such situations is becoming smaller as a result of technological changes.
                                                     
‡‡‡‡‡‡‡‡‡ The classic diagnoses of this problem are presented in Stigler (1971) and Jordan (1972).
§§§§§§§§§ See, e.g., World Bank (1997) and UNCTAD (1998).
********** See World Bank (1997), World Bank (2000) and Frischtak (1995).
†††††††††† UNCTAD (1997).WT/LDC/SWG/IF/15
Page 72
In the discussion in the Working Group, important links have been made between successful
efforts at regulatory reform and the existence of effective competition agencies.  First, the Group has
been advised that advocacy activities by competition agencies have acted as a catalyst for
pro-competitive reforms in both developed and de veloping countries.  Second, the point has been
made that the mere removal of regulatory controls or the privatization of former state monopolies – arelated form of government intervention - without the simultaneous introduction of competition policy
can leave the situation worse rather than better.  The reason is that no fundamental change has
occurred that creates incentives for improved economic performance.
‡‡‡‡‡‡‡‡‡‡
Important links have also been drawn between regulatory reform and pro-development trade
liberalization.  The point has been made in the Working Group that a transition from regulation to
reliance on competition policy (including, where required, pro-competitive regulation) can have the
important beneficial side-effect of facilitating foreign direct investment and access to markets byforeign suppliers.  The following examples of regulatory situations having adverse effects on
competition and trade have been advanced:  outmoded or unnecessary regulations;  a failure by
countries to recognize each others' technical standards;  state zoning laws or sanitary and
phytosanitary requirements that limit entry unnecessarily or serve as disguised tools for excluding
competing suppliers;  legal systems that facilitate strategic use of courts by firms to harasscompetitors;  and discriminatory R&D funding practices.  It has been suggested that the regulations
that need to be reviewed could be classified as fo llows:  regulation that openly discriminates in favour
of domestic suppliers;  regulations that are non-discriminatory on the surface but subtly
discriminatory in their substantive requirements;  regulations that simply are no longer needed;  and
poorly designed regulations that are desirable in principle but unnecessarily intrusive.  Anothercategorization that was put forward for regulatory policies that could have negative impacts on trade
is as follows:  regulations that were unnecessarily restrictive;  regulations that contained divergent or
duplicative requirements (an important example was where they impose duplicative performance
requirements);  regulations that serve as instruments of vested interests;  and regulations that lack
transparency.  Various suggestions were made for further work that might be undertaken on thismatter, including in the framework of the WTO.
§§§§§§§§§§
A word of reflection may be in order on the relevance of these concepts and findings to Least
Developed Countries (LDCs).  No doubt, the finer points of regulation and microeconomic policy
reforms may not always seem relevant to countries suffering from massive public health crises, food
and material shortages and political emergencies.  Certainly, these will often eclipse microeconomic
policy reforms in terms of public and political profile.  It may also be the case that, at the outset of the
process, much attention needs to be paid to even more basic rules and institutions of a marketeconomy than competition policy, such as the basic rules and institutions relating to property rights
and the enforcement of contracts.  This said, much experience suggests that the lack of well-
functioning markets and market institutions is a principal factor underlying underdevelopment, and
the lack of economic and institutional stability that is sometimes observed in LDCs.  Moreover, it is
                                                     
‡‡‡‡‡‡‡‡‡‡ WTO (1998).
§§§§§§§§§§ WTO (1998), paragraph 110.  One such suggestion is that there is an urgent need for
empirical research on the consequences for trade and competition of unnecessary, poorly designed and
discriminatory regulations.  Another is that the Group should give further consideration to the ways in whichWTO disciplines attempted to address the trade and competi tion effects of regulatory policies.  It has also been
suggested that the Group should give consideration to developing a WTO guideline to provide for regular and
systematic review of national regulatory policies in the light of competition policy principles.  The view hasbeen expressed that this would help to enhance the transparency and effectiveness of reform efforts and be auseful tool in promoting freer access to markets;  and th at such a guideline, administered by the WTO, would
have significant advantages for developing countries:  it would elevate the transparency and legitimacy ofreform efforts, provide access to relevant past experiences  of other countries, and help to overcome bureaucratic
resistance.  WTO (1998), paragraph 111.WT/LDC/SWG/IF/15
Page 73
self-evident that LDCs may not be in position to implement the necessary reforms by themselves.
The challenge for the international community is to identify ways of assisting the LDCs to implement
the necessary reforms in ways that unambiguously enhance their development prospects.
III. THE ROLE OF COMPETITION POLICY IN DEVELOPING MARKET
ECONOMIES
Much attention has been given in the WTO Working Group on the Interaction between Trade
and Competition Policy to the need for, and role of, competition policy in developing
countries.***********  While not all Me mbers may as yet be persuaded, there is broad acceptance at least
in principle of the relevance of competition polic y to the development process, including even for
countries at early stages of development.  A few of the reasons that have been advanced in the Groupfor the implementation of competition policy are as follows:
†††††††††††
• An adequate legislative and policy framework is required to protect consumers and
industrial users from anti-competitive practices that raise prices and reduce output.  Infact, the Group was informed that a large proportion (according to some Members, a
majority) of cases of anti-competitive practices in developing country settings involvethe supply of intermediate products purchased by other businesses, rather than goods
purchased by final consumers.  This underscores the adverse impact such practices
can have on local production and the importance of an effective competition policy in
this regard;
• the suggestion has been made that the role of competition policy in addressing the
trade-related effects of anti-competitive practices of enterprises may be particularlyimportant in a developing country setting.  For example, the impact of anti-
competitive practices in restricting access to markets by firms located in developing
countries may be particularly significant;
• the point has been made that the implementation of a transparent and effective
competition policy can be an important factor both in enhancing the attractiveness ofan economy to foreign investment, and in maximizing the benefits of such
investment.
  In this regard, competition policy can enhance the attractiveness of an
economy for foreign investment by providing a transparent and principles-based
mechanism for the resolution of disputes invo lving such investment that is consistent
with international norms that are widely accepted internationally.  Vigorous
competition in markets, reinforced by competition policy, also helps to maximize the
benefits of such investment to host countries, by encouraging participating firms to
construct state-of-the-art production facilities, to transfer up-to-date technology into
host countries and to undertake appropriate training programmes, and by preventing
the exploitation of consumers.  The suggestion has been made in the debates that
these effects may be particularly important in developing countries, in view of thecrucial importance for such economies of the technology transfer that can accompany
foreign direct investment;
• as noted, the point has also been stressed that competition policy can reinforce, and
may be essential to realizing, the benefits of privatization and deregulation
programmes and initiatives.
  The argument here was that, unless appropriate
measures are taken to ensure inter-firm rivalry, and to prevent the continuation and/or
                                                     
*********** See Anderson (2000).
††††††††††† Report (1998), paragraph 36.WT/LDC/SWG/IF/15
Page 74
re-establishment of monopolistic market structures, no fundamental change will occur
in the incentives facing firms that will improve their overall behaviour and
performance.  This benefit of an effective competition policy may be particularly
important for countries undergoing transition to a market-based economy, in that they
face particular challenges and dilemmas in introducing the necessary pro-competitivereforms to accompany privatization and deregulation programmes.
As a final comment on the relationship between economic development and competition
policy, it is increasingly clear that anti-competitive practices, in particular but not exclusively
international cartels, not only are more numerous and durable but also impair the process of
development in developing countries more significantly than has previously been thought.  This is
true for at least three reasons:
- First, because in the early stages of their industrialization, and given their narrow
domestic industrial base, developing countries have to rely on imports.  To the extent
that such imports are subject to anti-competitive practices either by domestic firms
(for example, an import cartel) or by foreign suppliers of these imports (for example,an export or international cartel), the importing country will be penalized by higher
than necessary import prices;
- second, because to achieve economic development, and in view of the fact that they
have narrow based domestic markets which leads them to rely on export markets,developing countries will be penalized by international cartels, or by import cartels
and by abuses of dominant positions in the countries of export;
- third, because foreign firms feel all the more free to engage in across-the-border anti-
competitive behaviour when the countries to which they export do not have adomestic competition law and can neither individually nor through cooperation with
foreign competition authorities challenge the firms' market behaviour.  Thus,
countries which do not have a domestic competition law will be the prime victims of
transnational anti-competitive practices.
‡‡‡‡‡‡‡‡‡‡‡
Available evidence shows that, for long periods of time, international markets for goods as
diverse as steel products, industrial diamonds, heavy electrical equipment, graphite electrodes, lysine,food additives, vitamins and many others have been subject to established quotas of production or
export and or to fixed prices which meant that importing countries were rationed and paid artificially
inflated prices for their imports.
§§§§§§§§§§§  In fact, this is just the tip of the iceberg, since it is known
that, currently, in the US there are thirty grand ju ries investigating international cartels.  A common
feature of some of these cartels (for example, the heavy electrical equipment cartel) is that they havepersisted in countries that lack an adequate competition law and have engaged in systematic predatory
pricing or dumping when new entry is threaten ed by suppliers from developing countries.
An argument that is sometimes invoked by sceptics of the usefulness of competition laws in
developing countries is that such laws may in fact be used as a Trojan Horse by multinationalcorporations to destroy the national economies of developing countries.  For example, an official of a
developing country which does not have a competition law has made the following argument, in a
conversation with one of the authors:  "There exists a suspicion that advanced nations do not seem
interested in countering international RBPs (restrictive business practices) of TNCs (trans-national
corporations).  In other words, the EU and the US es pecially aim at ensuring that developing countries
                                                     
‡‡‡‡‡‡‡‡‡‡‡ See Jenny (2000).
§§§§§§§§§§§ Useful information on many such cases is contained in U.S., International Competition Policy
Advisory Committee (2000).WT/LDC/SWG/IF/15
Page 75
institute effective antimonopoly laws at the national level but do not seem to be interested in dealing
with anti-competitive behaviours and RBPs of  their TNCs at the international level."
This argument raises the issue of the limitations of domestic competition laws, without
recourse to international cooperation, to solve some of the problems raised by cross-border
anticompetitive practices.  In any case, the adoption of domestic competition laws is a useful and
necessary first step for countries wishing to be in the position to protect themselves against
international anticompetitive practices which originate outside their territories but have an effect on
their domestic markets.  The evidence indicates unambiguously that countries without such laws are
intrinsically vulnerable to these practices.
IV. THE ROLE THAT INTERNATIONAL COMMITMENTS CAN PLAY IN
PROMOTING REGULATORY REFORM AND COMPETITION POLICY:
INTERNATIONAL COOPERATION AS A REMEDY FOR POLITICAL MARKET
FAILURE
In an important recent contribution to the theory of international economic policy-making,
Birdsall and Lawrence (1999) make the case that a principal benefit of trade agreements aimed at
measures beyond the border can be to facilitate domestic policy reforms, by providing a tool for
overcoming domestic constituencies that could othe rwise block the reform process.  In our view, this
is directly relevant to the case of regulatory reform and competition policy.  Indeed, Birdsall and
Lawrence refer specifically to the case of competition policy, observing that:
"When developing countries enter into modern trade agreements, they often make certain
commitments to particular domestic policies – for example, to antitrust or other competition
policy.  Agreeing to such policies can be in the interests of developing countries (beyond the
trade benefits directly obtained) because the commitment can reinforce the internal reformprocess.  Indeed, participation in an intern ational agreement can make feasible internal
reforms that are beneficial for the country as a whole that might otherwise be successfully
resisted by interest groups.  For example, trade negotiations may help mobilize more diffuse
but ultimately more representative groups, such as consumers (as well as potential exporters),
who will benefit from increased trade and whose interests more accurately represent overall
welfare, thereby offsetting the influence of organized producers and workers who compete
with imports.  In many cases, domestic forces interested in liberalization will find their casestrengthened if they can present their policies as fitting part of an international liberalization
agreement."
************
In other words, an (appropriately-constructed) international agreement might assist countries in
overcoming "political market failures" or rent-seeking activities that reduce welfare and impededevelopment.
††††††††††††
Interestingly, the potential contribution of international agreements in correcting political
market failures has been referred to specifically in the WTO Working Group on the Interaction
between Trade and Competition Policy, as a key rationale for enhanced cooperation on competitionpolicy at the multilateral level.  Political market failures are possible or even likely in the field of
                                                     
************ Birdsall and Laurence (1999), p. 136.
†††††††††††† On reflection, it seems clear that the role of international agreements in bolstering domestic
reforms that are welfare-increasing but politically difficult to  achieve is not, in principle, different from the role
that they have played in respect of tariff reductions.  The theory of international trade suggests that, in principle,it is in countries' interests to eliminate tariffs, even  unilaterally.  Notwithstanding this, most countries have
found it possible to systematically reduce tariffs only with the added leverage provided by international
agreements.WT/LDC/SWG/IF/15
Page 76
competition policy since, in many cases, anti-competitive practices that harm economic welfare are
likely to be particularly associated with concentrations of economic power, whereas the interests of
the consumers who are the victims of such practices are likely to be more diffuse.  This, it has been
suggested, may well result in under-investment in competition policy institutions particularly in
developing countries.  In the course of the Wo rking Group's work, the view has been expressed that
cooperation at the multilateral level could be particularly helpful in generating political support for the
implementation of effective competition policies at the national level; in ensuring that such policies
are applied in a non-discriminatory and transparent manner; in promoting common approaches to
particular practices where this seems feasible and warranted; and in promoting educational exchanges
regarding the content and sound application of competition policy.  Through such initiatives, it has
been suggested, cooperation at the multilateral level could contribute to remedying "political market
failures" that result in less than optimal support and resources for competition policy.‡‡‡‡‡‡‡‡‡‡‡‡
To be sure, the foregoing is not the only rationale that has been advanced by the proponents
of a multilateral framework on competition policy.  Specific objectives that have been advanced
include promoting the growth of strong national competition agencies in developing countries, to
protect them from anti-competitive practices that impact on their consumers and businesses;promoting (voluntary) cooperation between the competition agencies of participating countries, to
assist them in investigating particular cases; and contributing to a greater degree of "balance" in the
WTO system between the rights of producers and the protection provided for consumers and other
members of society.
The foregoing is not intended to and clearly does not resolve the debate as to whether there is
a need for a multilateral framework on competition policy in the WTO and, if so, what would be the
parameters of such a framework.  Indeed, this is a complex and multifaceted question which is beyond
the scope of the present paper.  Much would depend on the specific terms of such a framework.  Here,
it is relevant to note that, as stated above, the current proposals in the WTO focus more on supportingthe growth of competition agencies in developing countries than they do on market access objectives
per se .  Moreover, much of what is embodied in the current proposals is already contained in regional
trade agreements and bilateral agreements on competition policy to which a growing number of
countries are party.  In principle, developing countries could gain much from multilateralization of
these cooperation mechanisms and the resulting sharing of information and experience across as well
as within regions.  Notwithstanding this, it is evident that the question is a complex one that can only
be resolved through further discussions and debate.
                                                     
‡‡‡‡‡‡‡‡‡‡‡‡ WTO (1998).WT/LDC/SWG/IF/15
Page 77
Bibliography
Anderson, Robert D. (2000).  Issues Concerning Economic Development and International
Cooperation in the Work of the WTO Working Group on the Interaction between Trade and
Competition Policy , Paper prepared for presentation to an UNCTAD/Caricom/UWI Regional
Workshop on Competition Policy, Port of Spain, Trinidad.
Birdsall, Nancy and Robert Z. Laurence (1999).  "Deep Integration and Trade Agreements:  Good For
Developing Countries?" in Ka ul et al (1999), pp. 128-151.
Frischtak, Claudio C. (1995).  Regulatory Policies and Reform in Industrializing Countries
(Washington, D.C.:  The World Bank)
Jenny, Frédéric (2000).  Globalization, Competition and Trade Policy:  Convergence, Divergence and
Cooperation  (Paper presented at the WTO Regional Workshop on Competition Policy, Economic
Development and the Multilateral Trading System:  Overview of the Issues and Options for the
Future, Phuket, Thailand, July)
Jordan, W.A. (1972).  "Producer Protection, Prior Market Structure and the Effects of Government
Regulation," Journal of Law and Economics , vol. XV, No. 1, pp. 151-76.
Kaul, Inge, Isabelle Grunberg and Marc A. Stern, eds. (1999).  Global Public Goods:  International
Cooperation in the 21st Century  (New York:  Oxford University Press for the United Nations
Development Programme)
Krueger, Anne O. (1974).  "The Political Economy of the Rent-Seeking Society," American Economic
Review , vol. 64, no. 3, pp. 291-303.
Stigler, G.J. (1971).  "The Theory of Economic Regulation", Bell Journal of Economics and
Management Science , vol. 2, no. 1, pp. 3-21, Spring
UNCTAD (1997).  Empirical Evidence of the Benefits from Applying Competition Law and Policy
Principles to Economic Developmen t in order to Attain Greater Efficiency in International Trade and
Development  (Geneva, document TD/B/COM.2/EM/10, 1997).
U.S., International Competition Policy Advisory Committee (2000).  Final Report  (Washington,
D.C.)
World Bank (1997).  World Development Report , "Fostering Markets:  Liberalization, Regulation and
Industrial Policy", chapter 4.
World Bank (2000).  World Development Report , "Making Markets Work Better for Poor People",
chapter 4.
WTO Working Group on the Interaction between Trade and Competition Policy (1998).  Annual
Report of the Working Group on the Interaction between Trade and Competition Policy to the
General Council , Geneva, WT/WGTCP/2.WT/LDC/SWG/IF/15
Page 78
PANEL B:  PRESENTATIONS
Ataman Aksoy, Economic Advisor, Economic Policy, Development Prospects Group, World Bank
Please refer to joint presentation made with Mr. Uri Dadush entitled "Tackling the Trade Agenda in
the Poorest Countries" in Presentations by Panel D.
Graham Chipande, Senior Economist, UNDP in the Gambia.
Mainstreaming Trade Policy
1. INTRODUCTION
The completion of the Uruguay Round of trade negotiations and the impact of globalization
on the developing world, have brought to the fore , the need for Least-Developed Countries (LDCs), to
examine how best they can position themselves to take advantage of the benefits and minimise the
negative impacts that may arise  from these two aspe cts.  Due to the perversity of poverty in the
LDCs, the need for such a re-examination has been heightened by the need to promote growth and
poverty eradication.  Such a re-examination has centred around the need to undertake trade policy
reforms as they are seen as the best means for LDCs not only to take advantage of the changes takingplace in the international trading system and from globalization, but also to engender the growth
needed to tackle the problem of poverty.
In this paper we focus on the need for mainst reaming trade policies into development policies,
where mainstreaming trade involves the process and methods of identifying and integrating tradepriority areas of action into the overall framework of country development plans.  Thus trade priority
areas of action need to be reflected in poverty reduction and national development plans and
strategies.  Another reason for not undertaking trade reforms or developing trade policies in isolation
is that the benefits of trade reform and liberalization are only fully realised in the presence of mutually
supportive policies.
2. THE ROLE OF TRADE IN DEVELOPMENT OF THE LEAST-DEVELOPED
COUNTRIES
2.1 Trade and economic growth
The role that trade is supposed to play in promoting growth and reducing poverty cannot be
overemphasized.  Development literature abounds with studies that indicate, both from theoretical
underpinnings and empirical studies, the positive links between trade and development.  It is argued
for example that increased trade, promoted by liberalization policies, acts as a powerful stimulus to
economic growth, and that open trade regimes lead to higher rates of economic growth.  Trade may
facilitate international diffusion of knowledge, th ereby speeding up growth.  At the same time, trade
may also stimulate innovation and growth by expanding the effective market size by
producers
§§§§§§§§§§§§. While the links between trade and growth are varied and not unidirectional,
generally, cross-country studies have indicated that dismantling trade barriers stimulates exports and
hence economic growth*************.
                                                     
§§§§§§§§§§§§ "International Trade Policies: the Uruguay Round and Beyond, " Vol. 1, Principal Issue ,
World Economic and Financial Surveys,  IMF, 1994.
************* See Kruger (19780, Dollar (1992) and Edwards (1992).WT/LDC/SWG/IF/15
Page 79
It has been indicated that growth is constr ained in many LDCs due largely to structural
weaknesses that underlie their poor productive capacities and competitiveness, i.e., supply-side
constraints.  These include:
• The lack of linkages within and between productive, service and infrastructural
sectors which limits the potential for specialization and gains in productivity;
• Insufficiently developed human resources, which lead to a paucity of managerial,
entrepreneurial and technical skills;
• Shortcomings in production units related to weak technological capability and
adaptive research;
• Deficiencies in the physical infrastructure (e.g. transport, power, and storage
facilities) and other support services such as telecommunications, financial servicesand other technical support service institutions, particularly for marketing and input
and outputs; and
• The inability of LDC economies to generate adequate resources for investing in
alleviating the above constraints in order to enhance productive capacity.
The expected levels of financial and technical support from the international community, that
were meant to complement domestic resources have in turn not materialised.
2.2 Trade and poverty reduction
Experience suggests that rapid economic growth translates into sustainable reductions in
poverty, and that there is a significant association between trade liberalization and long run
improvements in economic growth.  Thus there is likely to be a positive link between liberalization
and eradication of poverty (Matusz and Tarr … ). Recently, a WTO study (2000) indicated that trade
liberalization helps poor countries to catch up with rich ones and that this faster economic growth
helps to alleviate poverty.  The experience of Korea, is cited as a good example of the link betweentrade and poverty reduction
†††††††††††††.  It is argued for example, that trade reform can lead to an
increase in employment in developing countries, according to the Hecksh er-Ohlin model.  This
follows from the fact that developing countries have an abundance of unskilled labour, and that such
countries have a comparative advantage in goods that use unskilled labour intensively.  Under such
circumstances trade reforms that remove policies that favour the import competing sector at theexpense of (labour intensive) exports sector, ultimately result in expansion of the latter and
contraction of the former.  Any increase in the demand for unskilled labour results in a combination of
higher wages and employment for this segment of the population.  This indeed leads to a reduction in
poverty and inequality.  Recent studies (Papageorion, et al., 1996;  Parker et al., 1995; and Harison
and Revenga, 1995) suggest that trade reform has had the expected positive impact on employment ina variety of countries.  Thus trade liberalization is expected to impact on the poor from two angles.
First, their wages rise as demand for labour increases.  Secondly, prices of the goods and services they
consume decline as trade removes supply constraints and price distortions.  There are fears that in
some circumstances liberalization may lead to “de-industrialisation”.  However, this seems to be the
exception rather than the norm and is usually associated with cases where the reforms are not wide
enough.
                                                     
††††††††††††† "Trade, Income Disparity and Poverty", WTO, Special Study No. 5,  2000WT/LDC/SWG/IF/15
Page 80
2.3 The need for trade reforms
The need for trade reforms has been well recognised in the development world for the past
decade or so.  Particularly, the failure of ODA to provide growth and poverty reduction, has made the
long "trade and not aid" phrase, the more important among LDCs.  Sometimes, trade reforms areopposed to due to fears concerning revenue loses, especially in situations where trade taxes constitute
a large chunk of tax revenue.  However, evidence tends to suggest that generally, removal of trade
barriers (especially quantitative restrictions) leads to an increase in revenue and improved
macroeconomic stability.
There is ample evidence that trade reforms undertaken by the developing countries during the
1990s, which focused on trade liberalization, and undertaken as part of integrated packages thatinclude macroeconomic and other structural reforms (including exchange rate systems) lead to
increased capital flows (Asia and Latin America) and helped boost productivity and exports.
However, it should be recognised that developing countries have not often enjoyed the full benefit of
such trade reforms.  This is because such reforms have been undertaken unilaterally.  As observed by
the IMF (1994), developing countries still face a range of tariff and non-tariff trade barriers inindustrial country markets.  Tariff escalation is a problem especially in such areas as agriculture,
textiles, etc.
2.4 Why mainstream?
From the above it is quite clear that trade liberalization can be an instrument  for promoting
growth and reducing poverty.  This is why many developing countries incorporate trade reforms in
their development and poverty reduction strategies.  Moreover, experience  suggests that trade
policies are impacted by policies in other sectors.  For example, agricultural and industrial policies
have an impact on trade policies.  In the Gambia, policies within the groundnuts sub sector, have beenknown to have an adverse impact on trade.  Thus, unless policies in these sectors are synchronized
with trade policies, trade policy reforms alone will not yield the intended benefits.  This is why it is
very important that trade policies be mainstreamed into the overall development framework.  The
Integrated Framework (IF) is now being adopted by many developing countries as a strategy for
ensuring that trade policies are effectively streamlined into overall country development frameworks.
3. TRADE POLICY IN THE GAMBIA
3.1 Background
The Gambia is predominantly an agricultural country.  Although the agricultural sector
contributes only 25 per cent of GDP, it is the source of livelihood for over 75 per cent of thepopulation, who live in the rural areas.  The agricultural sector is characterised by low productivity,
and this is largely due to excessive reliance on poor technology.  Structural and cultural problems also
hamper the development of the sector.  These include the limitations on women's rights to land
ownership, the absence of a rural credit network and the insufficient access of farmers to modern
techniques and adequate inputs.  The manufacturing sector is small and rudimentary, consists largelyof construction and contributes about 10 per cent of  GDP.  The services sector, which is dominated by
the hotels industry and a vibrant informal subsector, contributes about 65 per cent of GDP, and is the
main foreign exchange earner.
The Gambia has a limited resource base, and infrastructure is generally underdeveloped and
suffers from lack of maintenance.  Rapid population growth and increasing urbanization have posed a
threat to the environment and put pressure on the limited natural resources, thus aggravating
environmental problems such as soil degradation, loss of forest cover, loss of biodiversity, and poor
sanitation.  The basic social indicators clearly demonstrate pervasive poverty in the country.  ForWT/LDC/SWG/IF/15
Page 81
example, only 50 per cent of the population have access to clean drinking water.  According to the
1998 Household Poverty Survey, 37 per cent of Gambian households and 51 per cent of the
population are extremely poor.  At the same time, in  the area of education, enrolment rates are low,
particularly among girls.  In 1995/96 the combined enrolment ratio stood at 35.5 per cent.  Literacy
levels are very low, with the overall illiteracy level standing at 63 per cent and that for females at78 per cent (1993).  Latest health statistics indicate that although as much as 90 per cent of the
Gambian population have access to health services, the majority of the rural population cannot access
health facilities if we take into consideration affordability of transport costs and drug recovery
charges.  The incidence of malnutrition is quite high with children being the most affected group,
while under-five mortality estimated at 192 per 1,000 (1993), is one of the highest in the subregion,
albeit on a declining trend.  In addition, rapid population growth, coupled with slow economic
expansion over the years has resulted in a decrease in employment opportunities for a growing labourforce, while under-employment and low productivity are rampant in the rural areas.  Unemployment,
particularly among the youth in urban areas, is a very serious concern.
The country is heavily dependent on foreign trade, which accounts for about 75 per cent of
GDP, and relies on imports for capital goods as well as most of its consumer goods.  As such, tradepolicy features very prominently in the country's development strategy.
During the decade following Independence from Britain (1965-1975), The Gambia enjoyed a
relatively stable macroeconomic environment, which allowed it to make substantial progress both on
the economic and social fronts.
3.2 Overview of the Trade Sector
The Gambia is basically a resource poor Sub-Saharan, mono-crop, subsistence African
economy with a small domestic market.  The country is heavily dependent on foreign trade andgenerally relies on imports both for capital goods as well as most of its consumer goods.  International
trade is stimulated by the strategic location of Banjul as an entrepôt centre, which has been facilitated
by the maintenance of low import taxes, anchored on  a liberal trading system and the entrepreneurial
verve to maintain a competitive edge over neighbouring countries.
Imports
The FOB value of imports at current prices is projected at D2.36 billion in 1997/98 of which
approximately D833.8 equivalent to 3 5.3 per cent of imports are re-exports.  Over the last three years
the import trade has grown by an average of 36.2 per cent over the 1997 amount of D1.92 billion,
attributable to increases in both the value and volume of imports between 1994/95 to 1996/97.  A
significant rebound of the tourism trade from its depressed levels of 1994 and an accelerated pace inthe implementation of public sector projects substantially contributed to the buoyancy of imports.
The major source of imports are industrial countries especially the United Kingdom, the
Netherlands, Germany, France and the United States of America as well as China; Chinese Taipei and
Senegal.
The Gambia’s import regime is characterized by low and moderate tariff structures within a
ban of zero to twenty per cent, without any non-tariff import barriers. The maintenance of an open and
liberal trading system has contributed to the recognition of and expansion of The Gambia as an
entrepôt and trading gateway for the West African subregion, thereby assuring the availability of awide variety of tradable goods in the economy at internationally competitive prices.
Tariffs remain the primary means of import protection.  However, the number of industries
that are protected through excise duties are limited to beer, soap, sugar confectionery, wheelbarrowsWT/LDC/SWG/IF/15
Page 82
and nail manufacturing. The tariff structure is also  two-pronged in respect of goods originated from
the ECOWAS Zone, which attract moderate tariff levels.
The Gambia has effectively fulfilled its obligations for reduction of its common external tariff
under the Uruguay Round Agreements.  The maximu m duty rate is now 20 per cent, except for
relatively few items.  The number of import bands have been reduced to 19.
Exports
The value of exports at current prices increased marginally from D1,166 million in 1994/95 to
D1,317 million in 1996/97.  The export of groundnuts, and its derivatives, the traditional mainstay of
the Gambian economy witnessed a decline from D107 million in 1994/95 to D57.5 million in1996/97.  Re-exports, however increased by 21 per cent over the corresponding period.
3.3 Trade policy objectives
“The objective of The Gambia Trade Policy is to maintain an open and liberal trading
environment and to better integrate the Gambia into  the World economy.  In this regard, the thrust of
the trade policy is to systematically and progressively pursue the promotion and development of a
competitive trading environment and to continuously endeavour to move from low value added
primary products to higher value added products and to foster integrated production structures as well
as downstream and upstream product and service linkages in support of poverty alleviation andsustainable socio-economic development by increasing the per capita incomes of The Gambian
population through increased domestic and international trade.”
‡‡‡‡‡‡‡‡‡‡‡‡‡
Export promotion and diversification are the main aims of the Gambia’s trade policy, but
there are no official export financing, insurance, or guarantee schemes.  The share of the country’sexports – even its main exports, groundnuts – in total world trade is small as a result of which the
country may be facing elastic demand curves for all its exports.  On the contrary, the country has to
tackle structural factors that hamper a more efficient and competitive export production and constrain
its export performance (Kirkpatrick 1997:40).
The Gambia is a member of the Economic Community of West African States (ECOWAS)
and maintains reciprocal trade agreements on most-favoured-nation treatment basis with twocountries:  United Kingdom and Senegal.  Within the ECOWS Trade Liberalization programme
which came into force on 1
 January 1990, for a period of 15 years, the ECOWAS scheme postulates
the total elimination of customs duties and taxes of equivalent effect, removal of non-tariff barriers
and the establishment of a Customs External Tariff to protect goods produced in member states.
At the same time, The Gambia acceded to the WTO on 23 October 1996.  This calls for
compliance with the WTO Agreements, if the country is to benefit from new trade under the
preferential duty free treatment and low most-favoured-nation tariff treatment for imports into the
European Union, Japan and the United States of America, within the framework of the Uruguay
Round Agreements (URA) as well as any pre- Uruguay round benefits.
                                                     
‡‡‡‡‡‡‡‡‡‡‡‡‡ See The Republic of Gambia (1998), Trade Policy Framework for the Gambia .WT/LDC/SWG/IF/15
Page 83
Country Duty free treatment
(% of imports)Duty free and low MFN tariff
treatment (% of imports)
Pre-UR Post-UR Pre-UR Post-UR
EuropeanUnion24 38 74 80
U S A 1 0 4 08 28 5
J a p a n 3 5 7 15 57 8
Source:  Blackhurst, Enders, and Francois 1995
From the above, it is imperative that in formulating its trade policies, The Gambia must take
cognisance not only of its trade policy objectives but also regional and international trade
commitments.
3.4 Adjustment Policies and Structural Reforms
The Gambia has been implementing Structural Adjustment Programmes and Policy Reforms
for over two decades.  Mid-1985, the Gambia launc hed the Economic Recovery Programme (ERP) in
collaboration with the World Bank, the International Monetary Fund (IMF).  Other bilateral and
multilateral donors, including the African Development Bank (ADB), the Islamic Development
Bank(IDB), Kuwait fund, and the European Economic Community (EEC) also provided support to
the ERP.  The aim of the ERP was to transform the economy into a market oriented one.  To this end,
the Gambia designed and implemented a reform programme whose main objectives were:
• To restore the basis for sustainable economic growth and a viable balance-of-payments position
over the medium term;
• Reintegrate the parallel economy into the official sector;
• Normalize relations with external creditors;
The programme focused on adjustment measures and structural reforms in the areas of
incentives policies, fiscal and monetary policies and public sector reform, which were aimed at
reversing the declining trend in growth, redressing domestic and external imbalances and stabilising
the economy.  The following were the key elements:
• A tight fiscal policy involving improved expenditure control and a broadening of the tax base;
• A restrictive monetary policy;
• Strengthening of economic incentives, including the lifting of most price controls and the
introduction of a market-determined exchange rate in the context of a liberalized trade and
payments system; and
• The divestiture and rationalization of a number of public enterprises.
The economy responded positively to these reforms.  Between 1985/90, GDP growth
averaged about four per cent per annum.  The exchange rate stabilised and the fiscal deficit, including
grants, fell to five per cent of GDP.  At the same time arrears in external payments were wiped off andgross official reserves rose to the months equivalent of import cover.  These developments, coupled
with the progress that was achieved in the areas of administrative and civil service reforms,WT/LDC/SWG/IF/15
Page 84
culminated in the holding of a Round Table for the Gambia in July 1990.  At this Round Table, the
donors endorsed the launching of a Programme Sustained Development (PSD), which focused on
consolidating the gains of the adjustment process, thus far, and to achieve a long run expansion of the
productive capacity of the economy to support a significant improvement in the living standards of the
population.  Promotion of the principles of a free market economy and development of a strong and
vibrant private sector, were the 'kingpins' of the PSD.
Up until 1993, The Gambia was heralded as one of the "star performers" in as far as
undertaking economic reforms and adjustment was concerned.  The results were there to show for it.
By 1993, the domestic and external imbalances were practically eliminated.  For example, real GDP
growth averaged 3.3 per cent during the period 1985/88 to 3 per cent in 1992/93.  At the same, the
average annual inflation rate was reduced from 46 per cent in 1986/87 to 6.
The Gambia's external position improved considerably.  The gains in competitiveness,
coupled with the enhanced price incentives had a positive impact on diversification of the production
and export base, thereby leading to a build up in gross official reserves to about five months of import
cover, and elimination of external payment arrears.
However, these positive developments were rather short-lived.  It must be indicated that not
withstanding the improvements in the economic and financial situation, The Gambia continued to be
confronted with major structural, institutional and financial constraints.  The economy is characterised
by a narrow economic base and heavy dependence on external assistance.  A high population growthrate (3.5- 4 per cent per annum), high level of illiteracy (about 73 per cent) and food insecurity, make
the economy highly vulnerable to any domestic or external shocks.
In addition, the gains realised from the structural and economic reforms initiated in 1985/86
were short-lived.  From mid-1993, the Gambian economy suffered from a series of exogenous shocks.
On the external front, in August 1993, repurchase of the CFA Franc were suspended and
border controls were tightened by Senegal, and subsequently in January 1994 the CFA Franc was
devalued as part of a broad adjustment programme in the CFA Franc zone.  The developments
significantly dampened the Gambian re-export trade, which declined in real terms by about 24 per
cent in 1993/94 and 13 per cent in 1994/95.  Unfavourable terms of trade on the domestic front, an
unduly fiscal stance, increasing structural weaknesses and diminished private sector confidence,coupled with the military take over, in July 1994, dealt a same blow to economic prospects in The
Gambia.
A combination of the above factors resulted in a drastic deterioration in the economic and
financial situation in the country.  Real GDP registered a negative annual growth rate of four per centin 1994/95, while gross investment fell from 21 per cent of GDP in 1992/93 to 16 per cent in 1994/95.
Re-export trade and tourism, both declined drastically, while the country's overall balance of
payments moved into a deficit for the first time in nearly a decade (see Table 1.).
The implementation of the Programme for Sustained Development (PSD) came to a halt
following the July 1994 coup d'état.   The unfavourable travel advisory that followed the coup reduced
the number of tourists into the Gambia by more than fifty per cent. At the same time, the Gambia's
external development partners (except the UN family) suspended all project and budgetary aid.
3.5 Trade policy reform
Trade reforms were important components of bo th the ERP and PSD.  The trade reforms that
were initiated during the ERP were consolidated during the PSD and strengthened during the post
1994 era.  These reforms were largely changes to the tariff regime.WT/LDC/SWG/IF/15
Page 85
Generally speaking, the trade and tariff reforms of the Gambia are underpinned by a liberal
market oriented economic structure, responsive to shifts in demand.  Import duties on international
trade represent a significant portion of Government revenue, consequently, fluctuations in
international trade impact on government revenues.  The share of international trade taxes in total taxrevenue is estimated at 57 per cent of total revenues in 1999; reflecting a decline of 12 per cent from
its traditional contribution of approximately 70 per cent in previous years due in part to the tariff
reforms and the political crisis in the subregion which adversely affected the re-export trade.
Although international trade taxes have declined in  relative terms, it remains the largest source of
government revenue.  The introduction of the sales tax in 1990 replaced the import tax and led to the
abolition of the export taxes.
§§§§§§§§§§§§§.  It goes without saying that the Gambia relies greatly on
international trade taxes, a situation that may not be viable in the long run given the current trend ininternational trade negotiations and the ongoing regional integration efforts of which the Gambia is an
active participant.  Future reform efforts should therefore focus on diversifying the fiscal revenue.
It should be pointed out that considerable progress was achieved in the Gambia during the
ERP and PSD in terms of trade reforms, including the following:
• The total elimination of quantitative restrictions;
• rationalization of import duties;
• abolition of the import tax;
• the introduction of a sales tax;
• the abolition of export taxes; and
• the replacement of all but three specific duties with ad valorem duties.
During the post PSD and ERP era, reforms ha ve continued progress has continued to be
made, and these include the following:
As an integral part of its tariff harmonization exercise, and effective from January 1999, all
duty rates above 20 per cent have been reduced to 20 per cent and a revenue tax introduced on
cigarettes, vehicles, alcohol, beverages, soap, wheelbarrows, sugar confectionery and nails.
The objective of the current tariff structure is to provide a secure revenue base for
Government and to minimise the level of distortions within the structure of the economy.  The new
tariff structure consists of 19 tariff rates ranging from zero for essential consumer goods such as rice,
raw materials and government imports to a maximum of 35 per cent revenue tax on vehicles.  Other
revenue taxes are charged on the following commodities as follows:
                                                     
§§§§§§§§§§§§§ See, DOSTIE (1998) , Trade Policy for The Gambia: Towards a Proposal for a New Trade
Regime-Tariff Reform; Banjul.WT/LDC/SWG/IF/15
Page 86
Duty S/Tax Rev-Tax Env-Tax
a) Cigarettes 20% 10% D80/ctn D13.62/kg
b) Vehicles - New
from 1000cc - 2000cc
from 2000cc - above20%
20%10%
10%20%
35%-
-
c) Used vehicles of less thanD25,000 D10,000 10% - D1,000
d) All alcoholic beverages 20% 10% D25 p/Litre -
e) Soap 20% 10% D5.5/kg -
f) Wheelbarrows 20% 10% 5% -
g) Sugar confectionery 20% 10% 5% -
h) Nails 20% 10% 5% -
According to the overall trade restrictiveness measure presented by the IMF (1997), the
Gambia could be classified as a country with a relatively open tariff system and an open non-tariff
barriers regime.
As a result of and in fulfilment of its obligations as a Member of the WTO, the Gambia has
begun the process of making its trade classification, customs valuations and pre-shipment inspectionsystems comply with the requirements of the Ur uguay Round Agreements.  To this same end, the
Standard International Trade Classification (SITC) system was replaced by the Harmonized System
(HS) nomenclature in 1996, which is currently in force.  The Department of State for Trade, Industry
and Employment has initiated the process for the review of its domestic laws and regulations on
verification of the quality, quantity and price of goods and their customs classification to conform tothe Agreement on Pre-Shipment Inspection (PSI).
After the introduction of the flexible exchange rate system in 1986, all specific import duties
were converted into ad valorem equivalents in line with the Brussels Definition of Value (BDV)
developed by the World Customs Organization.  The overall structure of import tariffs have since
been significantly modified to avoid excessive taxation of intermediate inputs and other anomalies
while average duty rates have been lowered.  The general duty rate of 6 per cent applied to all importswas eliminated in 1988 following the introduction of th e national sales tax at the rate of ten per cent,
which remains applicable to a broad range of goods and services, with the exception of
telecommunication services which attract a sales tax of 15 per cent.
Beginning in 1999, further simplification and rationalization of the import tariff structure was
embarked upon by significantly reducing the number of import duties and their rates ranging from
zero per cent to 20 per cent.  The zero duty rate will be applicable to a few selected essential
commodities  However, a limited number of excise taxes have been introduced on petroleum
products, wheelbarrows, sugar, confectionery, nails, soap, alcohol, tobacco and vehicles.  An
environment tax has also been introduced on tobacco and used vehicles.
Government intends to change its system of custom valuation from the current BDV and
adopt the Uruguay Round Agreement on customs valuation
**************.  Where necessary, the
Government of The Gambia will take action to ensure conformity of its trade-related policies with
Uruguay Round obligations, while seeking to encourage domestic trading activity through themaintenance of low tariffs on commodities that are re-exportable.
                                                     
************** Agreement on Implementation of Article VII of the General Agreement on Tariffs and
Trade 1994WT/LDC/SWG/IF/15
Page 87
It is important however, to realise that the trade reforms were not undertaken in isolation.
Important reforms were undertaken concurrently in other areas.  As such, the accomplishments of the
ERP period inter alia  included:
• Full liberalization of the foreign exchange system;
• elimination of all external debt arrears;
• dismantling of subsidies and distortions in key markets such as basic foodstuffs, fuel
and groundnuts; and
• rationalization and divestiture of the public enterprise sector,
The Gambia’s approach to policy reform has been comprehensive.  Some of the development
priorities to which these reforms have been directed include:
• To attain and maintain a real growth rate of at least five per cent a year;
• To stimulate and encourage greater private sector participation in the economy,
placing continued emphasis on agriculture, tourism, financial services, processing and
light manufacturing industries;
• To ease the debt burden on the country’s limited resources by prudently managing the
existing debt and minimising the growth of new debt;
• To address the task of environmental protec tion, including the issues of deforestation,
soil management and solid waste disposal with renewed vigour and improved
technology;
• To continue the development of a modern ro ad network to facilitate the speedy and
efficient movement of goods and people throughout the country;
• To provide reliable electricity, water and telecommunications services at competitive
prices to households and businesses;
• To rehabilitate, maintain and protect public assets; and
• To intensify efforts to secure greater regional economic cooperation in the context of
the protocols of ECOWAS.
In this regard, the reform agenda in the Gambia has included a broad range of issues which
have an impact on trade, and include areas of privatization/divestiture, competition law, deregulation,
investment promotion, industrial policy, tax reforms, customs valuation, the exchange rate system,
trade finance, institutions and infrastructure,  and the legal and regulatory framework.  In addition tothe above, trade reforms in the Gambia have been undertaken in full cognisance of the role of the re-
export trade in the economy.
It is important to analyse the contribution of re-exports in a pragmatic context.  These make a
significant contribution to total exports, but they are, in the short to medium term, vulnerable to
political exigencies and changes in trade policies in neighbouring countries.  As demonstrated in
recent years, there was about a fifty per cent fall in imports meant for re-exports, and revenues from
customs duties fell drastically after the suspension of the convertibility of the CFA Franc outside theWT/LDC/SWG/IF/15
Page 88
CFA Franc Zone in 1993, and immediately after th e 1994 CFA Franc devaluation, which reversed
overnight the cost advantages of the Banjul port over Dakar’s and episodes of border closures and/or
restrictions to the movement of goods around the same time.  Earnings from this source might dry up
sooner rather than later if programmes, which are being implemented to address distortions to trade in
neighbouring countries, are completed.  The introduction of a pre-shipment inspection programme(PSI) towards the end of 1999 dealt a severe blow  to the re-export trade to the extent that the
programme has since been suspended.  However, this overly dependence on the re-export trade should
be particularly worrying to the Gambia as the WTO obligates Member countries to scale down
protectionist measures in the near future.
Total Exports, Re-exports, and Domestic Exports, 1993/94-1995/96 (value in D’000)
1993/94 1994/95 1995/96
Total exports 389,516 365,160 228,442
Re-exports   89,231 (23)   91,505 (25)   33,404 (14.6)
Domestic exports 300,284 (77) 273,654 (75) 195,037 (85.4)
Source:  Kirkpatrick, 1997, p. 32
Notes: Figures in parentheses refer to percentages.
Source:  Amjadi, A,U. Reinke and A Yeats, 1996.
4. MAINSTREAMING TRADE POLICIES IN THE OVERALL DEVELOPMENT
FRAMEWORK
From the foregoing, it is quite clear that trade plays an important role in the Gambia's
economy.  This has not only necessitated that trade policy occupies a central role in the country’s
development agenda but also that a comprehensive approach to policy reform is undertaken and in
such a way that trade policy is mainstreamed in the overall development framework.
In this section, we examine how this has been achieved or is being achieved in The Gambia,
and what instruments have been used to that effect, and at what cost if any.
To begin with, The Department of State in charge of trade policy matter, including
formulation, implementation, and enforcement and monitoring is the Department of State for Trade,
Industry and Employment.  Coordination is made th rough dissemination of information that relates to
other State Departments for action.  Respective roles of their State Departments on tariff policies and
other policies directly affecting exports and imports of goods and services are decentralised in the
sense that once the policy is in their respective domains, the responsible Department of State will
formulate, implement, enforce and monitor it but with some degree of consultations with other State
Departments that have roles in exports and import of goods and services.  It is not likely to experienceoverlapping of activities among institutions because every institution has a defined function.
There are only two State Departments whose roles have a bearing on tariff policies.  They are
the Department of State for Finance and Economic Affairs (DSFEA) and the Department of State for
Trade Industry and Employment (DSTIE).  The DSFE A is the custodian of government finances and
any reduction or increases in tariffs must be introduced and defended by Secretary of State for
DSFEA in Cabinet and Parliament.  The DSFEA is al so responsible for coordinating other  financial
and macro-economic policies of government.  The DOSTIE's role in tariff policy is consultative with
the DSFEA and also in trade policy formulation to  propose to the DSFEA tariff    reduction forWT/LDC/SWG/IF/15
Page 89
purposes of encouraging trade in certain commodities.  Other policies of DSTIE relate to formulation
of industrial policies, labour relations and energy policies, etc.  The private sector institution which is
associated with the formulation of trade policy is the Gambia Chamber of  Commerce (GCCI).  The
GCCI is associated in the form of consultation wi th government and also  its roles in acting as a
medium for transmitting the concerns of the private sector to government.
At the same time a number of institutions play a role in the implementation of trade-related
projects at the local level.  They are:
The Department of State for Tr ade, Industry and Employment;
The Gambia Chamber of Commerce and Industry;
The Department of State for Agriculture;
The Department of State for Fisheries and Natural Resources;The Department of State for Health;
The National Environment Agency;
The Department of State for Justice;
The Department of State for Finance and Economic Affairs;
The Department of Customs and Excise; andThe Gambia Ports Authority.
4.1 Instruments For Mainstreaming
So far three main instruments have been used in the Gambia for mainstreaming trade policies
in the overall development framework.  These are:
• Vision 2020
• The Integrated Framework
• The Strategy For Poverty Alleviation
4.1.1 Vision 2020
In order to consolidate the economic benefits of its Economic Recovery Programme (ERP)
and Programme for Sustained Development (PSD),  Government has embarked on a follow-up long
term socio-economic development agenda referred to as Vision 2020, whose overriding objective is toguide the process of economic transition and transformation from structural adjustment to sustainable
growth and to move The Gambia from the status of Least-Developed Country to a middle income
country by the vision year of 2020.
Regarding policy, the aim of Vision 2020 is to reconfirm the Government's commitment to
sustaining the liberal market-based economic policy framework and to reiterate the Government's
belief that the private sector is the engine for accelerated economic growth.  Vision 2020's missionstatement is as follows:
"To transform The Gambia into a financial centre, a tourist paradise, a trading, export-
oriented agricultural and manufacturing nation, thriving on free market policies and a vibrant
private sector, sustained by a well educated, trained, skilled, healthy, self-reliant andenterprising population, and guaranteeing a well balanced eco-system and a decent standard
of living for one and all, under a system of government based on the consent of the citizenry".WT/LDC/SWG/IF/15
Page 90
The above clearly indicates the central role trade policy plays in the Gambia’s long term
development strategy.  It is therefore not coincidental that an ongoing exercise to operationalise the
Vision 2020 - supported by UNDP - is being coordinated by the Department of State for Trade,
Industry and Employment.  Under this exercise, all s ectoral policies are being reviewed in the aim of
aligning them with the Vision 2020 objectives.  A ten-year action plan (2001-10) will be developed,to serve as a guide for the development of sectoral and multi-sectoral programmes.  Given the
prominence of trade policies within the vision, the exercise gives a very good opportunity for ensuring
that all sectoral policies take trade policy objectives into consideration.
4.1.2 The Integrated Framework
The Gambia is participating in the Integrated Framework for Trade-Related Technical
Assistance to Least-Developed Countries (IF) pr oject.  Following a needs assessment in 1999, a
Round Table was held in Geneva in November 1999, with the support of UNDP and UNCTAD.
While the exercise was coordinated by DOSTIE, all th e relevant institutions in Government as well as
other stakeholders such as the Gambia Chamber of Commerce and Industry (GCCI) and NGOs,
participated.  The need assessment revealed the lead role of trade policy in the development agenda ofthe Gambia.  The exercise helped the Gambia to ar ticulate its trade policy, investment policy and
other supportive policies including the legal and regulatory environment.
The projects that were identified in the Technical Cooperation Programme, cut across all
sectors, proving once again, both the need for a comprehensive approach to development and the needto ensure that trade issues are included in the relevant sectoral programmes.
4.1.3 The strategy for poverty alleviation
In accordance with the World Bank/IMF requirement that a poverty reduction strategy paper
be a prerequisite to assessing financial and technical assistance.  The Gambia launched the preparation
of a Strategy for Poverty Alleviation (SPA) II, which is  a follow up to SPA I, that formed the basis for
the PSD.
A comprehensive database on poverty has been developed and a number of sectoral studies
have been completed, including the European Union (EU) groundnut study, the United Nations
Development Programme (UNDP), food security survey and IDA supported public expenditurereviews of the education and health sectors.  Other PERs are to follow in the areas of agriculture,
health and local government.
Based on the long-term objectives of Vision 2020, five pillars and programme areas have been
identified:
Pillar I Enhancing the productive capacity of the poorProgramme Area 1 Macroeconomic Growth Strategy
Programme Area 2 Income Generating Activities.Programme Area 5 Food Security
Program Area 7 Creation of a Poverty Reduction Trust
Pillar II Improving access to and the performance of social services
Programme Area 4 Social Service Delivery
Programme Area 6 Improving Public Resource Management
Pillar III Building Capacities at Local Levels for People Centred Development ManagementWT/LDC/SWG/IF/15
Page 91
Programme Area 3 Redistributive Activities
Programme Area 8 Improving Participation in Local Decision-Making
Pillar IV Promotion of Participat ory Processes and Good Governance
Programme Area 6 Improving Public Resource Management
Programme Area 8 Improving Participation in Local Decision-Making
Programme Area 9 Coordination and monitoring of Poverty Reduction Strategy
Programme Area 10 Information, Education and Communication
Pillar V Provision of Economic and Social InfrastructureProgramme Area 3 Redistributive Activities
Programme Area 7 Creation of Poverty Reduction Fund
Programme Area 4 Social Service Delivery
An important feature of SPA II is the participatory approach that was adopted in its
formulation.  All major stakeholders, including government Departments of State, donors, NGOs and
the Private sector contributed to the formulation of SPA II, which covers a three-year period.
It should be emphasised that SPA II repres ents the Gambia’s medium-term development
framework.  In this respect all sectoral and multi-sectoral strategies, policies and programmes will be
guided by it.
4.2 The role of multilateral agencies
It goes without saying that LDCs cannot address the structural and policy weaknesses that
undermine their productive capacities and competitiveness alone.  Multilateral agencies, and indeed
the whole international community have a crucial role in assisting LDCs in the following areas:
• Improved access for LDCs products
• debt service payments
• capital flight
• investment, and above all
• capacity building.
For LDCs to benefit from the ongoing improvem ents in the international trade environment
and from globalization, they need to be able to formulate, implement and monitor appropriate
policies not only in the area of trade, but across the board.  In the Gambian case, the six partners
cooperating under the Integrated Framework, and indeed other development partners, including
bilateral and multilateral donors have played a very important role in assisting the country to
formulate the various policies and manage the whole reform programme.
5. CONCLUDING REMARKS
In conclusion we would like to indicate that the theoretical case for mainstreaming trade
policies into the overall development framework not  only for the promotion of growth but also forWT/LDC/SWG/IF/15
Page 92
poverty eradication is very strong.  At the same time, the experience of the Gambia has given as a
practical example of how trade policies can be mainstreamed into the overall development
framework.  The use of a Long-term Perspectiv e Plan (NLTPS or Vision 2020 in our case), the
Integrated Framework and the Poverty Reduction Strategy Paper (SPAII), can underpin this
mainstreaming.
It is our cherished hope that the efforts of the Gambia in this respect will bring about the
desired results of promoting growth and reducing poverty.WT/LDC/SWG/IF/15
Page 93
PANEL C:  PRESENTATIONS
Eimi Watanabe , Assistant Administrator and Director of the Bureau of Development Policy, UNDP.
Dr. Ravi Ratnayake, Chief, Trade Policy Section, International Trade and Industry Division,
UN-ESCAP, Bangkok.
Mainstreaming Trade into Country Development
and Poverty Reduction Strategies:
An Asia-Pacific Perspective
1. Introduction
Trade is usually considered as an engine of growth as it has been a major driving force behind
the economic success of many countries around the world including some developing countries in theAsia-Pacific region. Some countries in the region, in particular, newly industrialized economies
(NIEs) or the so-called “Asian tig ers” that shifted their economic policies from inward-looking and
import substitution strategies to outward-looking and export-oriented policies in the 1960s and 1970s
have been able to achieve remarkable economic gr owth and living standards and less poverty in a
relatively short period of time. A number of other developing countries (e.g., Thailand, Malaysia),usually called “second-tier NIEs” that have followed the same path have been able to produce similar
rates of growth from mid-1980s to 1990s. These countries are recovering steadily from the economic
and financial crisis which swept across the region in 1997-98. Many other developing countries
including LDCs in the Asia-Pacific region are ba sing their own development paradigms on the trade
strategies followed by the NIEs.
Currently there are 13 LDCs in the Asia-Pacific region, comprising of five countries in South
Asia (Bangladesh, Bhutan, Nepal and Maldives plus Afghanistan), three in South-East Asia
(Cambodia, Lao People’s Democratic Republic and Myanmar) and five in the Pacific (Kiribati,
Samoa, Solomon Islands, Tuvalu and Vanuatu). These countries are at different levels in terms of
both resource endowment, industrialization and econom ic development. They also differ significantly
in terms integration to the world economy and openness of trade.  Out of 13 LDCs in the region onlyfour are Members of the WTO (Bangladesh, Maldives, Myanmar and Solomon Islands) while most of
remaining LDCs are in the process of accession. Some have made substantial progress while some are
at a very initial stage.  Undoubtedly, WTO membership is an important prerequisite for these
countries to integrate fully into the world tradin g system without being further marginalized in a
globalized world with growing interdependence.
Governments have an important role to play in the process of integration into the world
trading system.  It is the responsibility of the government to create a conducive environment for trade
and investment by introducing sound economic policies including trade reforms and implementing
them. In some countries these policies are implemented as part of structural adjustment policies. Mostgovernments also use short and long-term development plans and poverty reduction strategies to
achieve the objectives of economic reforms.  The purpose of this paper is to examine the extent to
which governments in LDCs in the Asia-Pacific region have been able to incorporate appropriate
trade-related policies in their economic reforms, development plans and poverty reduction strategies.
The paper is structured as follows: Section 2 provid es an overview of LDCs in the region, looking at
both general characteristics and the extent of integration of these countries. Section 3 reviews the
recent trade policies followed by the concerned count ries.  The next two secti ons look at development
plans and poverty reduction strategies, followed by some concluding remarks in the final section.WT/LDC/SWG/IF/15
Page 94
2. An overview of LDCs in the Asia-Pacific region
Thirteen out of 48 LDCs are in the Asia-Pacific region. They rank lowest in terms of some
economic and social indicators such as per capita income, average rate of growth and adult literacy
ratio and highest in terms of some others like poverty.  Some of these are reflected in Table 1.   Forexample, per capita income of LDCs in the Asia-Pacific region varies from US$70 for Afghanistan to
US$3,657 for Myanmar while the average per capita income of all LDCs in the region is US$906
compared with U$1,205 of all developing countrie s. Similarly, LDCs are the poorest group in the
world. People in absolute poverty varies from 35 per cent for Myanmar to 60 per cent for Nepal,
Samoa and Solomon Islands and then to 90 per cent for Bhutan. The average percentage of people in
absolute poverty for all LDCs in the region is 55 which is nearly double of that of all developing
countries (31 per cent). An interesting feature emerging from the table is that LDCs in the Asia-Pacific region are performing better than the other LDCs in the world. For example, the average per
capita income of LDCs in the region is nearly four times higher than that of all LDCs in the world
(US $235).
Table 1.  Selected Socio-Economic Indicators
CountryPer capita GDP
1997 US$Average rate of
GDP growth
(1990-1998)
(%)Population
(millions)
(1998)Adult literacy
ratio (1995)
(%)People in
absolute
poverty
(%)
   South Asia
   Afghanistan      70 .. 21.4 31 53
   Bangladesh    339 3.1 124.8 38 48
   Bhutan    182 4.2 0.6 42 90
   Maldives 1 255 3.6 0.3 95 40
   Nepal   218 2.4 22.9 36 60
South-East Asia
   Cambodia   294 2.3 10.7 35 -
   Lao PDR   194 3.7 5.2 57 46
   Myanmar 3 657 .. 44.5 83 35
Pacific island
   Kiribati    700 1.6 0.1 .. -
   Samoa 1 156 0.9 0.2 .. 60
   Solomon Islands    925 0.3 0.4 .. 60
   Tuvalu 1 373 .. .. .. -
   Vanuatu 1 415 -0.5 0.2 .. -
All LDCs in Asia-
Pacific   906 2.1 52 55
All LDCs    235 0.9 613.5 48 65
All developing
countries1 205 3.1 4 696.8 70 31
Developed
countries27 402 1.4 885.3 ..
Source:  UNCTAD, t he Least Developed Countries 2000 Report  and Country Profiles.
Turning to the integration of LDCs into the wo rld trading system, it is a well-known fact that
LDCs have been historically marginalized from the mainstream world economy. Not only is theirWT/LDC/SWG/IF/15
Page 95
share of global trade disproportionately small but also they have not been able to benefit sufficiently
from international investments.  A majority of them are not yet Members of the WTO which makes
their presence in the world trading system more tenuous. We use percentage of trade to GDP as an
indicator of integration of these countries into the world trading system (Table 2.). Figures given in
this table should be interpreted with caution as they are distorted by inflated import bills due toincreases in oil prices and sharp depreciation of exchange rates.
††††††††††††††
The most salient feature emerging from the data given in Table 2 is that with the exception of
Myanmar, trade/GDP ratios have increased considerably during the last few years in all countries
indicating their greater participation in international trade. Trade as a percentage of GDP varies from
1.34 for Myanmar to 118.57 for Maldives, a country which depends highly on imports to meet its
local demand. These numbers are significantly lower than those of other developing countries inSouth-East Asia. For example, in 1995, trade as a percentage of GDP for these countries were:
Indonesia (53), Malaysia (194), Philippines (80) and Thailand (90).
Table 2.  Trade Integration of Selected LDCs of the Asia-Pacific Region
Percentage of trade to GDP Country
1990 1999Main exports
Bangladesh 24.78 32.59 Ready-made garments, knitwear & hosiery
products; raw jute, tea, leather, frozen shrimp
& fish
Bhutan 51.39 63.911Fruits, electricity
Maldives 131.15 118.57 Fish & fish products; ready-made garments
Nepal 24.88 41.27 Carpets; ready-made garments
Cambodia 32.15263.213Ready-made garments; logs & sawn timber;
rubber
Lao PDR 30.02 92.544Wood products; ready-made garments;electricity; coffee; tin
Myanmar  2.47 1.34 Fish & fish products; teak; rubber
Source: International Finance Statistics Yearbook 2000 , IMF.
11997, 21993,  31998,  41998.
Realizing the urgent need for the integration of these countries into the world economy and in
particular to expand trade opportunities, the WTO Action Plan for LDCs was adopted at the first
WTO Ministerial Conference at Singapore in 1996. At the high-level meeting of the six core-agencies
(IMF, ITC, UNCTAD, UNDP, World Bank and WTO) in 1997, it was decided to pursue a policy offree market access for exports from LDCs in view of the fact that 75 per cent of total exports from
LDCs comprised only 112 items (out of more than 5000 products traded internationally).  Most LDCs
in the Asia-Pacific region depend on only two or three products for their total export earnings.
However, until recently only 21 countries (15 members of EU, United States, Canada, Switzerland,
Turkey, Egypt and Mauritius) had issued notifications on liberalized market access for LDCs. Whilethe European Union allows duty free access to nearly all exports from LDCs only about 20 per cent
enter duty free into the United States. There is considerable scope for other countries to offer
concessions in this regard. Despite these positive developments market access for LDCs is severely
constrained by various other trade restrictions including tariff escalations, tariff peaks, non-tariff
                                                     
†††††††††††††† For example, in the case of the Lao People’s Democratic Republic, exchange rate
depreciated from 718 Kip per US dollar in 1993 to 7600 Kip per US dollar in 1999.WT/LDC/SWG/IF/15
Page 96
barriers and standards related to quality, safety, health, environment and labour. Although the
provisions under the Agreement on Technical Barriers to Trade and the Agreement on the Application
of Sanitary and Phytosanitary Measures are expected to provide solutions to most problems related to
standards, the evidence suggests that LDCs do not use these provisions effectively (ESCAP, 2000).
The second initiative of the WTO high-level meeting in 1997 was the setting up of the
Integrated Framework for Trade Related Technical Assistance to LDCs with a view to coordinating
technical assistance activities by all six international agencies. Table 3. shows the status of the
implementation of the Integrated Framework for LDCs in the Asia-Pacific region. With the exception
of three countries, all other LDCs in the region have completed need assessment reports, the first step
of the process of Integrated Framework. Most coun tries, however, have not been able to hold trade
related donor meetings to discuss possible areas and projects for technical assistance, that was to leadto the finalization of a multi-year programme of technical assistance.  In sum, it is clear from the
information given in the Table that after lapse of more than three years since its adoption, the
countries in the region have not yet benefited from the programme.
Table 3.  Integrated Framework for Trade-Related Technical Assistance:
Implementation Status for Least-Developed Countries
of the Asian and Pacific Region
WTO
membership
categoryCountry needs
assessmentIntegrated
response Trade-related meetingMulti-year
programme
Members
    Bangladesh October 1997 Published
November1997Held on 22.1.2000 in Dhaka Document prepared &
presented at the TRM
    Maldives September 1997 Published February
1998Not held yet Not yet prepared
    Myanmar Completed October  ‘98 Published in 1998 Not held yet Not yet prepared
    Solomon
IslandsOctober 1997 Published April
1998Joint regional trade related meeting
for the Pacific Islands being explored
for mid-2001Not yet prepared
Observers
    Bhutan Completed April 1998 Published
September 1998TRM scheduled for November 2000 Not yet prepared
    Cambodia Completed June 1998 Published
September 1998Not held yet Not yet prepared
    Lao  PDR Completed September
1997Published March
1998Not held yet Not yet prepared
       Nepal Completed September
1997Published October
1997Not held yet Not yet prepared
     Samoa Completed September
1997Published April
1998Joint regional trade related meeting
for the Pacific Islands being explored
for mid-2001Not yet prepared
    Vanuatu Completed September
1997Published October
1997Joint regional trade related meeting
for the Pacific Islands being explored
for mid-2001Not yet prepared
Others
    Afghanistan Not done yet Not applicable Not applicable Not applicable
    Kiribati Not done yet Not applicable Not applicable Not applicable
    Tuvalu Not done yet Not applicable Not applicable Not applicableWT/LDC/SWG/IF/15
Page 97
Source:  Web site of WTO’s Integrated Framework Administrative Unit as on 1 January 2001.
3. Domestic trade policy reforms
(a)   Evolution of trade policies
LDCs in South Asia (Bangladesh, Bhutan, Maldives and Nepal) traditionally followed a
development strategy with greater reliance on impor t substitution along with many other developing
countries in the region. Since the early 1980s, there have been some significant changes in their trade
regimes, with the direction of policy away from import substitution towards export-orientation andoutward looking trade and industrial strategies with a view to integrating their economies into the
world economy. In general, policy reforms included the liberalization of imports and investment,
relaxation of price controls and exchange rate reforms. Some of recent policy changes, in particular,
trade policy reforms have been carried out under the South Asia Preferential Trading Arrangement
(SAPTA), which concluded two rounds of trade negoti ations involving substantial reductions in tariffs
and non-tariff barriers while the third round of negotiations is currently under progress. These policy
reforms have contributed to the transformation of these primarily agrarian economies to relatively
more industrial and service-oriented economies (Table 4.).
Table 4.   Sectoral Composition of Production in SAARC Member
Countries (as per cent of GDP)
Agriculture Industry Services Region/country
1980 1997 1980 1997 1980 1997
SAARC * 37.8 24.8 25.0 30.2 37.2 45.0
Bangladesh 49.4 32.4 14.8 10/2 35.8 48.4
Bhutan 56.7 36.2 12.2 28.0 31.1 35.9
India 38.1 24.3 25.9 31.9 36.0 43.8
Maldives 31.0 22.0 6.0 17.0 63.0 61.0
Nepal 61.8 41.0 11.9 19.1 26.3 39.8
Pakistan 30.6 24.2 25.6 26.4 43.8 49.4
Sri Lanka 26.6 18.3 27.2 32.3 46.2 49.4
Source: ADB, Asian Development Outlook , 1997 and 1998.
Research and Information System for the Non-Aligned and Other Developing Countries,
SAARC Survey of Development and Cooperation 1998/99 .
Policy shifts in trade can be easily observed by looking at evolution of trade regimes at
individual country level. For example, in the mid-1980s, Bangladesh started shifting its trade strategy
from an inward-orientation to an outward-oriented policy by introducing, inter alia, liberalization of
trade and foreign exchange regimes. By the end of 1980s, it moved away from the “positive list”
system to a more liberal “negative list” system, in which the number of items have been reduced
progressively since then. With the acceleration of trade liberalization in the 1990s, the highest rate ofimport tariff was reduced from 350 per cent in 1991 to 40 per cent in 1999 and the number of tariff
bands were reduced from 17 to 4 during the same period making the tariff structure much more
simplified. The average import-weighted tariff declined from 24 to 14 per cent during the same
period. These changes in nominal tariffs have contributed to significant reductions in effective rates of
protection (ERP) (WTO, Trade Policy Review, 2000).WT/LDC/SWG/IF/15
Page 98
Recently the government of Bangladesh has initiated a number of actions to strengthen the
capacity of trade-related infrastructure and institutions  to facilitate the process of integration of the
economy into the world trading system. This includes the launching of a long-term Customs and Tax
Modernization Program and improving the capacity of the Tariff Commission to provide guidance to
the government and the private sector on matters related to the WTO.
Since 1980s, Nepal has embarked upon a trade policy reform package which includes
reductions in both tariff and non-tariff barriers. Tariff rates as high as 250 per cent in 1980s were
reduced substantially leaving the highest rate at 110 per cent and multiple tariff bands were reduced to
six bands which simplified the tariff structure significantly with the budget for 1995/96. Similarly,
quantitative restrictions on trade were also removed gradually from the mid-1980s and almost all
import items were placed under Open General License after abolishing the import license auctionsystem in 1993.
LDCs in South-East Asia (Cambodia, Lao Peopl e’s Democratic Republic and Myanmar) are
economies that are in the process of transition from centrally planned economic system to market-
oriented systems. Therefore, the trade regimes of these countries remain at a lower scale of opennessand transparency.  While Myanmar is a Member of the WTO, Cambodia and Lao PDR hold observer
status and are in the process of accession to the WTO. Recently, the three countries have made
considerable progress in terms of trade liberalization. To begin with, Cambodia, a country that had
been ruined largely by war and political unrest for decades and became stable only in the early 1990s,
has introduced a package of economic reforms which includes policies aimed towards free trade,increased foreign investments and market-based foreign exchange rates. State monopolies have been
privatized and price controls affecting domestic trade have been largely removed. Although
Cambodia’s trade is relatively liberal, ministerial authorization is required for importation of certain
products including pharmaceutical products. Currently, the simple average of all tariff items is 18.6
per cent and the trade-weighted average stands at 16.5 per cent which is relatively low in comparisonto LDCs in South Asia. On the export side, there is a quota on exports of rice, and ban on exports of
unprocessed and sawn timber since 1995.  There are also some moderate export taxes of 5 to 10 per
cent on certain products including cut and sawn wood, precious stones and rubber.
Historically, Lao PDR had a Soviet-style co mmand economy system with state enterprises
and cooperatives, centralized trade, investment and production. The country also had high barriers on
internal and external trade. An important shift of policies took place in 1986 with the introduction of
"new economic mechanism" (NEM) aimed at creating better conditions for private sector activity and
placing increased emphasis on market forces in the allocation of resources. The ownership of farms
and the right of selling goods in the open market were given to farmers. Some policy changes were
introduced to make foreign trade more liberal through lifting some trade barriers and replacing non-
tariff barriers with tariffs. Currently, there are six bands of tariff rates ranging from five per cent for
promoted goods such as heavy equipment and machine tools to 40 per cent for automobiles. Inaddition to import tariffs, excise taxes are imposed on a wide range of products ranging from 104 per
cent on luxury cars to 60 per cent on alcohol. In addition to both import tariffs and excise tax,
importers have to pay turnover of tax of five to ten per cent on most imported products. Putting all
these taxes together, the foreign trade regime of Lao PDR remains relatively restrictive compared with
many other LDCs.  However, the recent accession of Lao PDR to ASEAN and its application for the
membership of WTO in 1998 are expected to facilitate the faster integration of the economy in to the
world trading system.
In sum, during the past decade, the Asia-Pacific LDCs, in particular, Asian LDCs have
embarked upon policy reforms liberalizing their trade regimes significantly. For example, a recentWT/LDC/SWG/IF/15
Page 99
ESCAP study on the implementation of the Programme of Action‡‡‡‡‡‡‡‡‡‡‡‡‡‡ shows that eight (four
South Asia, three South-East Asia and one Pacific Island countries) out of 13 LDCs in the region have
undertaken tariff reductions and rationalizations of tariff structures and five (three South Asia, two
South- East Asia) countries have abolished quantitative restrictions on imports. The study also shows
that these countries have initiated some limited measures related to the other aspects of trade regimessuch as expansion of the supply base and supply capacity of exports, deregulation and legal reforms,
export promotion and private sector development.
(b)  Regional integration
Governments of LDCs in the region appear to have understood the potential benefits of
joining regional initiatives including regional trading arrangements (RTAs). They are members of oneor more RTAs: Afghanistan (Economic Cooper ation Organization-ECO), Bangladesh (SAPTA,
BIMST-EC
§§§§§§§§§§§§§§, Bangkok Agreement), Bhutan, Nepal and Maldives (SAPTA), Cambodia
(AFTA),  Lao PDR (AFTA, Bangkok Agreement) , Myanmar (AFTA, BIMST-EC), Solomon Islands
and Vanuatu (MSG***************, PARTA†††††††††††††††, SPARTECA‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡),  Kiribati, Samoa and
Tuvalu (PARTA, SPARTECA). In addition, most of these countries have entered into bilateralagreements to promote trade and investment. These regional and bilateral agreements are increasingly
seen as "fast-track" approaches to free trade. However, it is of vital importance to pursue these as
"building blocs" or “stepping stones” of a wider trade liberalization strategy promoted by the WTO.
(c)  Overall direction of trade policies
Next, we look at the major objectives of trade policies being followed by LDCs in the region
in the most recent period that demonstrate the overall directions of trade policies and the major laws
and regulations dealing with exports and imports that indicate the priority accorded by policy makers
to trade. This information can be used as indicators showing the extent to which respectivegovernments have pursued a liberal trade environment. The information given in Appendix A has
been extracted from the needs assessment papers prepared by countries under the Integrated
Framework.
According to the stated objectives in the needs assessment papers, the overall direction of
trade policies of LDCs in the region appears to be towards liberal trade regimes, while one country
(Maldives) has gone far beyond that and mentioned  “free trade” as an objective. Most countries havestated export diversification and export growth as a major objective while some countries seem to
recognize the role of the external sector in the national economy. Enhancing private sector
participation has been mentioned as an objective by a number of countries.  Some countries
mentioned integration with the global and regional trading system as a desired objective while none of
the countries mention the membership of the WTO as a long-term objective of trade policies. This issurprising given the fact that only four out of 13 LDCs in the region are WTO Members and that
countries are required to undertake extensive reforms in the trade sector in the process of accession to
the WTO.
Overall, although respective governments in the Asia-Pacific LDCs have been able to make
some progress towards making their economies more liberal in the context of both global and regional
integration initiatives, substantial changes in thei r trade policy regimes are required for integrating
                                                     
‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Review of  Implementation of the Programme of Action for LDCs for the 1990s: A
Synthesis Study, ESCAP, 2000 (draft).
§§§§§§§§§§§§§§ Bangladesh-India-Myanmar-Sri Lanka-Thailand Economic Cooperation.
*************** Melanesian Spearhead Group Trade Agreement.
††††††††††††††† Pacific Regional Trade Agreement.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ South Pacific Regional Trade and Economic Cooperation Agreement.WT/LDC/SWG/IF/15
Page 100
these economies into the world trading system. For example, in the case of LDCs in South Asia, while
some remarkable shifts are taking place in their trade policies, much more need to be done to make
these regimes more liberal and transparent. These include further tariff reductions, phasing out of
quantitative restrictions, and increasing the transparency of related policies such as customs
administration, tariff concessions, import surcharges, subsidies, other incentives and so on.
4. Development plans, poverty reduction strategies and trade
The preceding section has analysed the extent to which LDCs in the Asia-Pacific region have
been able to mainstream trade by introducing appropriate trade policies to promote outward-oriented
strategies and facilitate effective integration of their economies into the world trading system. In order
to make trade truly mainstream, governments need not only to include trade as a priority area of
action in other major policy documents such as national development plans and poverty reduction
strategies but also to implement them as planned.
(a)   National development plans and trade
We attempt below to examine how far countries have been able to include trade as an
objective or strategy in their development plans. We do this by looking at some country cases since all
the latest national development plans are not readily available for a cross-country comparison.
We start with Bangladesh , where the national development planning system moved away
from long term plans to three-year rolling investme nt plans. In addition, the government issued the
New Development Perspective (NPD) which has become the economic manifesto of the government.
The NPD recognizes the need for an accelerated and sustainable social and economic of Bangladesh,
according to which the major national goals include the following:
- Human resource development;
- increased employment opportunities, particularly for rural areas;- strengthening of the national economy through development of the rural economy
with priority on agriculture;
- promotion of competitive efficiency;
- promotion of joint enterprises with a focus on agriculture, small trade and industries;- promotion of private enterprises based on competitive efficiency with a thrust on
export-oriented industries;
- promotion of export-led growth.This list of national goals clearly demonstrates the importance that the government attaches to
export promotion and related goals such as private enterprise development and promotion of
competitive efficiency.
Nepal’s  national planning system dates back to 1956. Table 5. presents major objectives and
strategies of national development plans of Nepal for the last four decades. It shows that whileconsecutive national plans had standard objectives such as economic growth, employment, income
distribution and efficient use of resources, trade diversification and expansion was included as a
strategy in all national plans starting from the Fourth (1970-1975). In its Ninth plan (1998-2002)
Nepal recognizes the need to accelerate economic gr owth through, inter alia, developing the base forWT/LDC/SWG/IF/15
Page 101
industrialization, promoting trade and investment oppor tunities with neighbouring countries and at the
regional level. However, liberalization of trade and investment was not mentioned as a major strategy
in any of the plans.
Table 5.  Main Objectives and Strategies of National Development Plans for Nepal
Plans Main objectives Major strategies and policies
First (1956-1961) 1.  Increases production
      and create employment
2. Raise standard of living
      of common people1.  Village development
2.  Agriculture development
3.  Development of infrastructure
Second (1962-1965) 1.  Increase production to
        meet the need of
        expanding population
2. Provide additional
Employment
3. Provide social justice
        and distribution of the
       increased production1.  Development of infrastructure
2.  Agriculture development
3.  Social justice
Third (1965-1970) 1.  Promote welfare of the people
2. Regulate the ownership
        and control of the
        resources of the
        community to bring        equitable distribution
      of wealth1. Faster growth in agricultural
        Production
  2.  Institutional reform
  3.  Price stabilization
  4.  Development of economic
infrastructure
5. Industrial development
6.  Regional development
Fourth (1970-1975) 1.   Maximize output
  2.   Establish the base for
        sustained and long-term
        economic growth1. Mobilization of internal
Resources
2. Concentration of limited
Resources
3. Incentive for investment in private
sector
4. Trade diversification
5.  Social justice
Fifth (1975-1980) 1.  Increase mass-oriented
Production
2. Maximize the use of
Labour resources
3. Promotion regional
        Balance and integration1. Mobilization of industrial resources
2. Changes in investment pattern
3. Adaptation of labour-intensive
technique
4.   Industrial management
  5.  Economic stabilization
6. Trade promotion and
Diversification
Sixth (1980-1985) 1.  Increase production at
Faster rate
2. Increase productive
        Employment opportunities
3. Meeting the minimum needs of
The people1. Priority on agriculture
Development
2. Emphasis on cottage and small-
Scale industries
3. Emphasis on export promotion
And tourism development
4. Conservation of natural resources
And development of waterWT/LDC/SWG/IF/15
Page 102
Plans Main objectives Major strategies and policies
        Resources
5. Increased the absorptive capacity
Of the economy
Seventh (1985-1990) 1.  Increase production at higher
Rate
2. Increase opportunity for
Productive employment
3. Fulfill the minimum basic needs 
Of the people1. Overall priority to the
Development of agricultural
        Sector
2. Development of forest resources
And soil conservation
3.   Development of water resources
4.   Curb the population growth rate
5.   Promotion of exports6. Improve the management of the
Economy
Eighth Plan ApproachPaper (1993-1997)1. Sustainable economic
        growth
2.   Poverty alleviation
3. Rural development and
      Regional balance1. Agricultural intensification and
Diversification
2. Development of rural
Infrastructure
3. Employment generation and
Human resource development
4. Export promotion and
Diversification
5.   Energy development
6.   Macroeconomic stabilization7.   Better monitoring and evaluation
8.   Public administration reform
Source:   Development Planning in Asia  – Asian Pacific Development Centre.
Maldives  with a tiny population, consisting of many small islands (1,190) and relatively
limited natural resources depends heavily on a few export products including tourism and fishproducts. In the National Development Plan fo r 1994-1996, trade was not mentioned as a major
objective while promotion, facilitation and liberalization of investment was a major objective under
the sectoral plan for trade and industry. However, liberal trade policy, export orientation,
diversification and promotion were included as major strategies under the plan. The Government’s
commitment to maintain a liberal trade regime through relaxation of import and export controls andreducing tariffs was emphasized in the plan. The Government appears to have attached great
importance to exploitation of marine resources with export-orientation given the small size of the
domestic market.  It also emphasized the need for seeking “opportunities for the provision of high
value added, low volume products and services in those areas where it has a comparative advantage”
(page 2). Some promotional activities suggested in the document were setting up of a data bank toprovide export guidance, the provision of incentives and organization of export fairs.  In addition, a
number of major projects such as the compilation of a trade data base to facilitate the process of trade
policy formulation and establishment of an offshore service centre were mentioned under major
programmes and projects. Projects went beyond the traditional areas to new areas such as intellectual
property rights. The main objectives of this project was to “introduce trademarks, copyrights, patents,and industrial design law, and to encourage designers and producers to increase productivity”.
Bhutan , a landlocked country with a small population and limited land suitable for
agricultural production because of the extremely mountainous terrain is geographically isolated from
major ports and markets. High transport costs and limited infrastructure have been identified as majorWT/LDC/SWG/IF/15
Page 103
constraints to export trade. It has introduced a number of development plans of which the Eighth Five-
Year Plan (1997-2002) has the following major objectives: self-reliance, sustainability, preservation
and promotion of cultural and traditional values, national security, balanced development, improving
the quality of life, institutional strengthening a nd human resource development, decentralization and
community participation and privatization and private sector development. Similar to nationaldevelopment plans in most other LDCs, international trade is not mentioned as a major objective of
the plan. However, creation of a conducive policy and legal framework for promoting trade and
industrial development was a major strategy under the trade sector of the plan.  Specifically, the major
objectives of external trade are to promote trade and improve the balance of trade with India and to
expand trade with SAARC and other countries. It appears that the country attaches great importance
to neighbouring countries as trading partners. There are also a few special projects/programmes in the
area of trade, which include the project on Bhutan trade development and the project on improvementof trade and transit facilities (i.e., road links). Most importantly, the accession to the WTO has been
mentioned as a special project. It said that “Bhutan may join the World Trade Organization in the near
future in order to keep pace with the ever-cha nging international trading environment and avail
benefits from the globalization process” (page 139).
For Cambodia , overall national development strategies are given in a number of important
documents: the National Programme to Rehabilita te and Develop Cambodia (NPRD), the Five Year
Socio-economic Development Plan (SEDPI), the Tr iangle Strategy, the Royal Government Platform
for the Second Term (1998- 2003) and the Policy Framework Paper (PFP). Trade issues are included
in some of these documents either as an objective or strategy. For example, one of the objectives ofNPRD is to integrate Cambodia’s economy into the region and the world. Similarly, one of the three
areas of the government’s Triangle Strategy is Cambodia’s integration into the region and
normalization of relationships with the internatio nal community in order to attract more foreign
assistance and FDI. Cambodia became a member of ASEAN and is expected to join the WTO in the
near future.
Trade in Vanuatu , a small Pacific Island country, is constrained by isolation from major
markets, small domestic market, limited availability of raw materials, lack of skilled manpower and
local entrepreneurial capability and scarcity of capital (Republic of Vanuatu, 1991, page 281).
According to the Second National Plan (1987-1991), the government appears to have understood the
problems associated with import substitution policy. It claimed that import replacement activities
were not successful because the production processes were characterized with high proportion ofimported inputs, low domestic value added, and relatively low productivity of labour (page 287).
(b)   Poverty reduction
§§§§§§§§§§§§§§§ and trade
Although there is no direct relationship between  trade and poverty, trade as a major driving
force of economic growth can reduce poverty by raising average per capita income and affecting
income opportunities of poor people. With regard to the relationship between trade reforms and
poverty, the recent WTO study shows that “trade liberalization is generally a positive contribution to
poverty alleviation-it allows people to exploit their productive potential, assist economic growth … ”
(page 6).  It emphasizes the need for introducing appropriate compensatory measures to minimize theshort-term negative effects of trade policy reforms. Similarly, the World Bank in its World
Development Report (2000) recognizes importance of market reforms to promote opportunities, in
particular, export opportunities for poor people. In this context, LDCs, the most poverty stricken
group of countries in the world, should incorporate trade in their poverty reduction strategies and
implement as planned.
                                                     
§§§§§§§§§§§§§§§ Poverty Reduction Strategy Papers have not yet been prepared for any least developed
country in the Asia-Pacific region. A number of countries including Cambodia, I-PRSPs are being prepared.WT/LDC/SWG/IF/15
Page 104
It is a well-known fact that East Asian countries have been able to reduce poverty by
embarking upon broad-based trade-led growth strategies as can be seen in Table 6.  For example, the
Republic of Korea, a rapidly industrializing coun try with average economic growth around eight per
cent over 1980s reduced the percentage of people in absolute poverty from 23 in 1970 to five in 1990.
Poverty incidence of all six countries declined from 35 per cent in 1970 to ten per cent in 1990. Theseachievements in poverty reduction were mainly due to the policies promoting broad-based economic
growth focusing not only on urban areas but also rural areas. Agricultural development policies were
an important part of growth strategies followed by some of these countries as more than 75 per cent of
populations of these countries are in rural areas (Johansen, 1993). LDCs in the region can benefit
enormously from the valuable experience of advanced East Asian countries, in particular in
mainstreaming trade into in poverty reduction strategies.
Table 6.  Estimated Absolute Poverty, 1970-1990:
Selected East Asian Countries (per cent)
Incidence of poverty Country
1970 1980 1990
China Total
Rural
UrbanPercentage poor in rural areas33
39
5
9728
--
--
969
11
2
95
Indonesia Total
Rural
Urban
Percentage poor in rural areas60
58
73
8229
28
29
8015
14
17
66
Malaysia Total
Rural
Urban
Percentage poor in rural areas18
21
10
859
--
--
852
4
1
85
Philippines Total
RuralUrban
Percentage poor in rural areas35
4220
8530
3518
7521
2711
77
Rep. of Korea Total
Rural
Urban
Percentage poor in rural areas23
28
16
8410
9
10
375
4
5
20
Thailand Total
Rural
UrbanPercentage poor in rural areas26
30
9
9417
19
5
9416
20
4
94
Six countries Total
Rural
Urban
Percentage poor in rural areas35
40
13
9323
27
9
9210
12
5
87
Source: World Bank Discussion Paper, Poverty Reduction in East Asia:  the Silent Revolution , 1993.
Note : Except for China, estimates for 1990 are projections.  The incidences are based on official
poverty lines for China, Indonesia, Malaysia and the Republic of Korea; official subsistence lines forWT/LDC/SWG/IF/15
Page 105
the Philippines and lines slightly lower than the official ones of Thailand.  Absolute poverty lines
allow 2,150 calories per day, 90 per cent from grains, and non-food basic needs or other baskets
costing the same.
Poverty reduction needs a concerted effort in which government can play a critical role in
introducing appropriate policies and actions in national development strategies. In this regard most
LDCs in the region have introduced poverty reduction as an objective of national development plans.
For example, the ninth development plan of Nepal recognized poverty eradication as its major
development objective. Promotion of trade and investment was mentioned as a major strategy to
accelerate economic growth and then to reduce poverty. In the case of Cambodia, poverty reduction
by integration of the Cambodian economy into the region and the world has been recognized by major
development strategy documents such as the Royal Government’s Platform for its Second Term(1998-2003). It is believed that effective integration of the economy into the world trading system
would have a positive impact (both direct and indirect) on poverty alleviation. In the case of
Bangladesh, according to the three-year rolling investment plan (1994-96), the major development
objective of the government is poverty alleviation through inter alia productive employment creation
and development of the rural economy with a priority on agriculture.
In sum, by looking at the national development plans of some selected countries, LDCs in the
region appear to have understood the importance of mainstreaming trade into their national
development strategies. These countries have been able to incorporate trade as a priority area of
actions in national development plans reasonably well, which is more apparent in the last two decades
where some advanced developing countries in the region that had followed trade-oriented
development strategies, achieved remarkable economic growth and poverty reduction.
5. Role of ESCAP
ESCAP is of the view that it is imperative for the LDCs in the region to be an integral
part of the world trading system in order to bring these economies to mainstream economic
development with economic growth, improved sta ndards of living and less poverty. ESCAP as a
cooperating Agency of the Integrated Framework, will continue to assist LDCs, both WTO Members
and the countries yet to join by strengthening the capacities of both their human resources and
institutions to deal with WTO related issues including market access in a number of ways:
(a) As mentioned before, only four out of 13 LDCs in the region are WTO Members
while the remaining countries are in the process of accession. Countries find it
extremely difficult to meet the requirements of the long accession procedure
including the preparation of a memorandum on the Foreign Trade Regime involving a
comprehensive review of trade and related policies and the submission of answers to
thousands of questions raised by the Member countries of the WTO.  The LDCs inthe region possess neither the capacity nor the resources required to deal with matters
related to accession. In this context, ESCAP assists the countries which are yet to
become Members by organizing training workshops on accession related issues in
collaboration with WTO. The main purpose of these workshops is to enhance
understanding of concerned trade officials on the accession procedure and to provide
them an opportunity to learn the best practices from the countries that have been able
to accede recently.
(b) Market access is a major issue of concern to all developing countries including LDCs.
While there is slow progress in the implementation of decisions taken at the high-
level meeting organized by 6 co-agencies in 1997 at the WTO with regard to duty
free access to exports from LDCs, their export opportunities are further constrainedWT/LDC/SWG/IF/15
Page 106
by various other restrictions including standards related to quality, safety, health,
environment and labour. These barriers are even more severe for products which
LDCs have been promoting as part of their export diversification plans (e.g., textile
and clothing, fish products, leather).  In this context, ESCAP has been assisting LDCs
in developing the capacities of their human resources and institutions to exploitmarket opportunities in both developed and developing countries. For example,
ESCAP recently organized a national workshop on enhancing export opportunities
through environmentally sound business development in Kathmandu for relevant
government officials and private enterprises. In addition, participants from LDCs are
included in the WTO/ESCAP trade policy training courses which are expected to be
organized jointly by WTO and ESCAP on a regular basis. The purpose of these
training courses is to facilitate the more effective participation of Asian developingeconomies in the negotiation and implementation of WTO agreements. In the first
3-week trade policy course on the WTO and the multilateral trading system for Asian
developing economies which was held at ESCAP from 8 to 26 May 2000, trade
policy makers from seven LDCs (Ban gladesh, Bhutan, Cambodia, Lao PDR,
Maldives, Myanmar and Nepal) participated. In addition, a number of other activities,including the meetings of senior officials dealing with trade matters have been
organized by ESCAP, usually prior to WTO ministerial meetings. The last such
meeting was an ESCAP/UNCTAD/ADB Meeting of Senior Officials on the Future
WTO Agenda and Developing Countries at Bangkok from 23 to 25 August 1999, to
assist developing countries of the ESCAP region in their preparations for the ThirdWTO Ministerial Conference and future multilateral trade negotiations.
(c) ESCAP accords priority to regional and subregional initiatives such as regional
trading arrangements (RTAs) as building blocs of a broader trade liberalization
strategy promoted by the WTO.  In this regard, ESCAP not only provides technicalassistance to initiatives such as BIMST-EC of which the two of the five members are
LDCs (Bangladesh and Myanmar) but also functions as the secretariat of the
Bangkok Agreement of which Bangladesh and Lao PDR are members. BIMST-EC is
a sectoral development programme that includes trade and investment while the
Bangkok Agreement is a preferential trading arrangement promoting trade through
exchange of tariff concessions among members.
(d) ESCAP also supports a number of special  programmes with a particular focus on
trade and investment. For example, ESCAP has developed a comprehensive
programme for private sector development, the so-called “Hi-Fi” plan,
****************
with generous support from the Government of Japan, for the countries in the Greater
Mekong Subregion (GMS) which include s three LDCs (Cambodia, Lao PDR and
Myanmar). One major objective of this plan is to build human and institutional
capacities in trade policy making, trade promotion, trade facilitation and foreign
direct investment.
6. Concluding remarks
The paper has two major conclusions. Firstly, although respective governments in the Asia-
Pacific LDCs have been able to make some progress towards making their economies more liberal in
the context of both global and regional integration initiatives, substantial changes in their trade policy
regimes are required for integrating these economies into the world trading system. While someremarkable policy shifts are taking place in their trade policies, much more need to be done to make
                                                     
**************** Hi-FI plan focuses on 4 areas: H –human resource development, I –institutional capacity
building, F –facilitation (trade), I –investment.WT/LDC/SWG/IF/15
Page 107
these regimes more liberal and transparent. These include further tariff reductions, phasing out of
quantitative restrictions, and increasing the transparency of related policies such as customs
administration, tariff concessions, import surcharges, subsidies, other incentives and so on. Secondly,
LDCs in the region appear to have understood th e importance of mainstreaming trade into their
national development strategies. The countries have been able to incorporate trade as a priority area ofaction in national development plans reasonably well, which is more apparent in the last two decades
where some advanced developing countries in the region that had followed trade-oriented
development strategies, achieved remarkable economic growth and poverty reduction.
It is somewhat puzzling to observe that whil e all these trade policy reforms together with
other structural policy reforms such as financial sector reforms, privatization and exchange rate
reforms and inclusion of trade as a priority area of action into national development plans have beentaking place at a greater scale than ever before, the people in LDCs are still amongst the poorest in the
world. This can be attributed to many factors including political instability, lack of government
commitment to the implementation of policies and plans, inadequate financial resources and lack of
trained human resources and institutions. Most importantly, in order to benefit from sound trade
policies and development plans, a clear government commitment to the implementation of suchpolicies/plans as well as clearly defined implementation strategies are needed.
Successful implementation of policies/plans depends largely on the capacity of human
resources and institutions to deal with these issues efficiently. For example, many LDCs in the region
neither have human resources nor institutions to carry out trade policy reforms that they are requiredto implement under the structural adjustment pr ogrammes of the World Bank and IMF. Similarly,
LDCs in the region do not have institutions with well-trained human resources to handle the
complicated process of WTO accession which requires extensive knowledge and experience not only
in the preparation of memorandum on trade policy re gimes and provision of answers to the questions
related to it, but also in the accession procedure. Establishment of institutions capable of dealing withtrade policy reforms and the WTO accession such as Tariff Commissions are urgently needed in
LDCs in the region. At present, in most LDCs in the region, these issues are dealt with by many
government institutions including the Ministries of Finance, Planning, Trade and Industries and
Department of Customs and the Central Banks, an institutional mechanism which clearly lacks
coordination. In this regard, ESCAP will continue to assist these countries by building and
strengthening the capacities of both institutions and human resources to facilitate the process of their
integration to the world trading system.
The world community including advanced developed and developing countries and
international and regional agencies can play a critical role in bringing these countries to mainstream
economic development and in capacity building to face the challenges of globalization, liberalization
and the new economy. In order to facilitate faster integration of LDCs into the world trading system,the world community should ensure a full implemen tation of the Integrated Framework initiative
allow duty-free access to all products from the LDCs and ensure a fast-track accession of LDCs to the
WTO.WT/LDC/SWG/IF/15
Page 108
References
ESCAP (Economic and Social Commission for Asia and the Pacific) 2000, Development through
globalization and partnership in the twenty-first centu ry:  an Asia-Pacific perspective for integrating
developing countries and economies in transition into the international trading system on a fair andequitable basis  (ST/ESCAP/2054).
ESCAP 2000, Economic and Social Survey of Asia and the Pacific 2000, United Nations, New York.Johansen, F (1993), Poverty Reduction in East As ia: The Silent Revolution, World Bank Discussion
Papers 203, Washington.
Ministry of Planning, Royal Government of  Bhutan, Eight Five Year Plan (1997-2002).
National Planning Commission, Nepal (1992), The Eight Plan (1992-1997).
Republic of Maldives 1994, National Development Plan 1994-1006.Republic of Vanuatu 1991, Second National Development Plan, Volume 1.Tambunlertchai, S and B.P Gupta (1993), Development Planning in Asia, Asian and Pacific
Development Centre.
World Bank 2000, World Development Report 2000/2001: Attacking Poverty.WTO (1999), Accession of Cambodia, Memorandum on the Foreign Trade Regime, Geneva.
WTO (1999), Trade, Income Disparity and Poverty, Special Studies, Geneva.
WTO 2000, Trade Policy Review-BangladeshUNCTAD 2000, The Least Developed Countries 2000 Report, Geneva.WT/LDC/SWG/IF/15
Page 109
APPENDIX A
Main Objectives of Trade Policy and Related Laws
and Regulations of Selected LDCs
Country Major objectives  of trade
policyMajor laws and regulations
on trade policy
South Asia
   Bangladesh • Promote rapid export
growth through reducing
and ultimately eliminating
the anti-export bias
prevalent in the economy.• Imports and Exports (Control) Act,
1950.
• Importers, Exporters and Indentors
(Registration) Order, 1981.
• Customs Act, 1969.
   Bhutan • Enhance the contribution of
the trade sector to the
national economy by
promoting internal and
international trade with
increased private sectorparticipation through the
creation of an environment
conducive to growth of
trade.
• Expand trade on a sustained
basis and gradually reducetrade imbalances.
• Diversify the export base
through the identification
and development of
exportable products in such
a manner as to make thetrade sustainable and
competitive.• Trade licence rules and regulations.
• Export and import regulations.
• Tariff and non-tariff regulations.
• Trade Agreement with India and
Bangladesh.
• The Agreement on the South Asian
Preferential Trading Agreement
(SAPTA).
   Maldives • Free trade.
• Foreign investment.
• Service related products,
including tourism.• Law on Foreign Investment (No.
25/79).
• Law on Exports and Imports (No.
31/79).
   Nepal • Enhance the contributions
of trade sector to nationaleconomy by promoting
international trade with the
increased participation of
the private sector through
the implementation of anopen and liberal
atmosphere.• Export and Import Control Act – 1957
(Consolidated).
• Customs (sixth amendment) Act –
1996.
• Customs Regulations – 1969.
• Export and Import Rules – 1977.
• Trade Policy – 1992.
• Diversify trade by
identifying, developing and
producing new exportable
products.WT/LDC/SWG/IF/15
Page 110
Country Major objectives  of trade
policyMajor laws and regulations
on trade policy
• Expand trade on a sustained
basis to achieve gradual
reduction in trade
imbalances.
• Promote trade in
coordination with other
sectors of the economy.
South-East Asia
  Cambodia • Establish a liberal trade
regime.
• Increase integration with
the regional and global
trading system.
• Promote investment.
• Support the development of
export-oriented industries.
• Expand employment
opportunities.
• Spur economic growth to
reduce poverty.• Customs Law.
• Law on Investment.
• Sub-decree on Implementation of the
Investment Law (1998).
• Chamber of Commerce Law (1995).
  Lao Peoples’
Democratic Republic• Shift from the production
for subsistence to the
production for export
markets.
• Integrate the national
economy to that of theregion and world economy.
• Encourage local and
foreign investors to produce
for exports.
• Improve the living
conditions for the people by
introducing new tradingtechniques.
• Tariff reduction,
administrative procedures.• Customs Law.
• Law on the Promotion and
Management of Foreign Investment in
the Lao PDR.
  Myanmar • Proper evolution of a
market-oriented economic
system.
• Wider participation of the
private sector in foreign
trade.• Imports and Exports (Temporary) Act,
1947.
• State-owned Economic Enterprises
Laws.
• Union of Myanmar Foreign Investment
law.
• The Central Bank of Myanmar Law.
• Tariff Act.
• Income Tax Law and Commercial Tax
Law.
• Customs Act.WT/LDC/SWG/IF/15
Page 111
Country Major objectives  of trade
policyMajor laws and regulations
on trade policy
Pacific island countries
  Solomon Islands • Development of export
activities.
• Participate in the globalized
economy and avoid the risk
of economic
marginalization.
• Increase the international
competitiveness of the
economy.
• Maintain and increase
export levels for the
currently dominant
commodities
• Develop new trading
opportunities on “niche”
markets for products ofecological value with
export potential.
• Develop tourism by
enhancing the quality of the
domestic products.• Customs and Excise Act.
• Income Tax Act.
• Foreign Investment Act.
  Vanuatu • Establish an open trading
regime.
• Enhance the machinery of
governance.
• Redefine the role of the
public sector (with a focuson efficiency).
• Promote private sector-led
growth while induce greater
social equity.• Import Duties (Consolidation) Act.
• Import of Goods Control Act.
• Business Licence Act.
• International Business Companies Act
(1992).
• Registration of United Kingdom Trade
Marks Act and Registration of United
Kingdom Patents Act.
• Foreign Investment Act.
• Investment Code.
Source:   Website, Needs Assessment paper, Country-specific Round Tables:  Documentation .WT/LDC/SWG/IF/15
Page 112
PANEL D:  PRESENTATIONS
Uri B.  Dadush , Director, Economic Policy and Development Prospects Group, World Bank
Tackling the Trade Agenda in the Poorest Countries
Mr. Ataman Aksoy and Mr. Uri B. Dadush††††††††††††††††
Globalization has become a central issue for developing countries in recent years. Properly
managed, integration into the world economy has been shown to be a powerful instrument in
achieving and sustaining high rates of economic growth and reducing poverty.  However, during anera of rapid global integration, many developing countries, especially the poorest and smallest among
them, have shown only modest progress in per capita incomes, declining export shares in world
markets, and, in too many instances, sharp economic regression.  Bridging the growth performance
gap between the poorest countries and the rest remains one of the central challenges facing the
international community.  This note traces a policy agenda designed to deal with the impediments totrade integration in the poorest countries.
1. Trends in the poorest countries:  Some lessons
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡
Trade liberalization and export development have been a prominent element of reforms
undertaken in developing countries during the 1980s and 1990s.  These reforms helped reduce border
protection in many countries.  By the end of 1990s, average tariffs were significantly lower than in the
late 1970.  The incidence of quantitative restrictions, and non-tariff barriers (NTBs) was also greatly
reduced - import quotas and foreign exchange licensing and controls were removed in most countries
- a great achievement.  At the same time, other supply side constraints to efficient trade integrationwere recognized and reforms were implemented in the regulatory structures, privatization of
production and services, elimination of State monopolies, and in improving the functioning of key
trade institutions  Similar attempts were made to improve macroeconomic policymaking; fiscal
deficits and inflation fell on average, and more competitive exchange rates were adopted.
Reducing distortions in the incentive regime by lowering trade barriers - the traditional focus
of the reforms in the 80’s and 90’s - along with reforms in the domestic incentive structures, helpedmany countries to achieve higher growth rates.  Among small, low-income countries that managed to
avoid conflict, per capita GDP and export growth  accelerated during the 1990s.  Even with this
acceleration, the growth rates in poorer countries were much lower than other middle-income
developing countries and much lower than the industrial ones.  Although the reforms did lead to
greater exports and supply response in many of the countries and in many products, the responseswere not large enough and broad enough to place these countries into an accelerating growth path and
reverse the increases in poverty.  Many low-income countries have not been able to use trade as an
engine of growth, as some of the more successful East Asian Countries have done.
Thus, although the poorest countries are clearly integrating to the world economy, the benefits
accruing to them have been disappointing.  The share of the poorest countries in global trade declined
from 0.8 per cent in 1980 to 0.4 per cent today.  The GEP 2001 projects that per capita incomes in
sub-Saharan Africa will only expand by only 0.5 per cent in the coming decade.  In many of the
poorest countries there is an urgent need to ‘get trade integration right’ as this is a vital engine for
growth and poverty alleviation.
                                                     
†††††††††††††††† The authors are respectively Economic Advisor and Director of  the Economic Policy and
Prospects Group, World Bank.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ This section draws heavily on “Global Economic Prospects 2001”, Chapter 2.WT/LDC/SWG/IF/15
Page 113
The experience of the 1990s makes it clear that integration of the poorest countries is a multi-
facetted challenge.  It has a national dimension - the policies and institutions needed for trade to be an
instrument of pro-poor growth; and a global dimension - the promotion of development through
international cooperation on trade-related issues.  Realizing the potential gains from trade is a
complex and difficult process.  Success in integrating into the world economy is not universal, in part
because not all countries reformed trade policies sufficiently, but also because there are many
complementary policy reforms at the national level, required to support trade reforms and barriers
exist in accessing world markets.  Measures to  create an enabling environment for supply-side
responses to changed incentives are needed. ‘Behi nd the Border’ barriers to trade integration - for
example, measures that restrict international competition in distribution and transport services - can be
as, if not more, important obstacles than border barriers such as tariffs and NTBs.
To a significant extent this has been recognized in the reform programmes.  The emphasis on
measures to improve the business environment, support private sector development, improve
legislation and regulations pertaining to property rights, investment, contract enforcement, and so
forth, and to enhance the functioning of the financial sector are among the key elements of reformstrategies in most markets.  However, the absence of a strong supply response in many countries
suggests that anti-export biases remain.  Trade measures are not adequately complemented by other
reforms, and that greater efforts are needed to ensure that reform programs deal with the bottlenecks.
Finally, access to the main markets for the products of the low-income countries have to be
improved.  This is especially important in agricultural products, where the inability to diversify into
other agricultural products together with reforms to improve supply response have actually led to a
greater concentration of exports in traditional agricultural products, leading to lower prices and
greater vulnerability to price fluctuations.
These interrelationships among different dimensions of reform programmes have highlighted
the importance of integrating the policies of trade reform within the development strategies of each
country.  Furthermore, these strategies need to evolve in line with the developments in the countries,
especially in light of the outcomes of the reform measures already undertaken.
2. Reform process:  The poverty reduction strategy papers (PRSP)
The experience of the 1990s also holds important lessons on how to integrate these issues
within the development programmes of low income countries.  Externally driven programmes,
however well designed, have not been very successf ul and awareness has grown that ownership by the
country is a critical determinant of success even in the best designed programmes.  Furthermore
national consensus around these programmes, is absolutely essential for sustainability and consistencyin implementation.
§§§§§§§§§§§§§§§§
In recognition of the importance of ownership, the new approach for generating a
development strategy is embodied in the Poverty Reduction Strategy Papers (PRSP) being undertaken
in most of the low-income countries*****************.   PRSPs were launched in 1999 and are country-
driven, comprehensive, results-oriented, with a long term view of development and developed in
coordination with national civil society and donors.
The PRSP process at the country level is driven by the governments.  It starts out with the
participatory process (including central government agencies, parliament, civil society, externalpartners and the public) coming to an understanding the nature of poverty in each country.  The
                                                     
§§§§§§§§§§§§§§§§ These conclusions have also been cited by the evaluation of the Integrated Framework
***************** UNDP has a similar structure with its UNDAFs.WT/LDC/SWG/IF/15
Page 114
participatory process then leads to choosing poverty reduction objectives, defining strategies to
achieve these objectives and finally monitoring  outcomes, evaluating impacts and adjusting the
process as needed.  This later provides feedback for a better understanding of poverty and how to
alleviate it.
It is expected that the PRSP process will assist each eligible country – IDA/HIPC/PRGF
(respectively: International Development Associ ation/Highly Indebted Poor Countries/Poverty
Reduction and Growth Facility) to formulate a poverty reduction strategy that includes efforts to
benefit from integration into the global economy.
Currently, efforts on the PRSP front are centering on so-called Interim-PRSPs.  Interim
PRSPs (I-PRSPs) launch the process and enable c ountries to access Fund PRGF assistance and reach
HIPC Decision Points.  The I-PRSP is primarily a de scription of existing poverty reduction strategy
(PRS) and a plan for preparing a full PRSP .
Full PRSPs require more time and effort, including broad-based participation.  Revised on a
three-year cycle with annual progress reports.  After July 2002, full PRSPs will form the basis forBank’s Country Assistance Strategies for IDA countries.
As of early January 2001, twenty-six I-PRSP and three PRSPs were completed
†††††††††††††††††.
In the Africa Region, twenty Interim PRSPs (I-PR SPs) have been discussed by the Bank and IMF
Boards.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡   Three full PRSPs have been discussed so far by the Boards.§§§§§§§§§§§§§§§§§  Six
more Africa I-PRSPs are likely to be discussed by the Boards in the first half of 2001.
The early I-PRSPs have provided important information.  First, quantified estimates of
income poverty and targets for poverty reductions have been acquired in several countries.  Secondly,
the numbers show that poverty is multi-dimensional and predominantly rural – though highest amongspecific excluded/disadvantaged socio-economic groups.
To date many countries are responding very favourably to the invitation that they take the
initiative.  The development partners support these principles and many are willing to build their own
programmes on basis of PRSPs.  However, major challenges remain, such as: country capacity
constraints - including preparatory capacity; availability of good and up-to-date data;  and a clear
understanding of expectations for I/PRSP content and process.  Weaknesses have also been noted inthe coherence between the macro framework and the PRSP, lack of detailed and costed poverty
reduction programmes and actions and risk assessment.  Tensions are inherent and unavoidable in the
PRSP process as countries  have to balance importance of transparency, accountability, good
governance, empowerment of poor; the quality of the document versus timeliness; and country
ownership versus assessment and support by partners.  This tension is heightened by the need forclarification on the role of development partners and the expectations of the World Bank and IMF.
The World Bank and the IMF have taken initiatives to facilitate the PRSP process.  These
include capacity building (joint missions, training - country personnel and World Bank/IMF staff);
                                                     
††††††††††††††††† The countries who have completed an I-PRSP are Albania , Madagascar , Benin ,
Malawi  ,Bolivia , Mali, Cameroon , Moldova , Chad , Mozambique , Gambia , Nicaragua , Ghana , Niger , Guinea ,
Rwanda , Guinea Bissau , Sao Tome and Principe , Guyana , Senegal , Honduras , Tajikistan , Kenya , Tanzania ,
Macedonia , Zambia .  The countries who have completed a PRSP are Burkina Faso, Uganda and Tanzania .
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Benin, Cameroon, Chad, The Gambia, Ghana, Guinea, Guinea-Bissau, Kenya,
Madagascar, Malawi, Mali, Mozambique, Niger, Rwanda, Sao Tome and Principe, Senegal, Tanzania, andZambia are self-standing I-PRSPs while Mauritania and Uganda included I-PRSPs in HIPC decision pointdocuments.
§§§§§§§§§§§§§§§§§ Uganda, Burkina Faso, Tanzania.WT/LDC/SWG/IF/15
Page 115
clarifying approaches to preparation/content (sourcebooks to be used as a source of good practice but
not as a blueprint); identifying and resolving problems early; and continuing the consultation process.
Finally, while country ownership and vision is essential, support of external partners is critical
for the effectiveness of the PRSP process.  Donors can  help Governments build capacity to formulate
participatory poverty reduction strategies; and engage in extensive discussions within PRSP countries.
It would strengthen the quality and ownership of su ch programmes.  It is desirable that any effort,
both by the international organizations and other donors, be coordinated and integrated into the PRSP
process.  Therefore, arrangements for individual projects with separate government agencies, which
have been the basic mode of operation historically, need to be modified to operate through the
consultations and discussions in the preparation of the PRSP.
3. Impediments to integration******************
Although the specific constraints facing each country are different, ongoing analyses have
highlighted a set of issues that have been identified as key constraints to global integration in low-
income countries.  In this context, it is useful  to make a threefold distinction among the country’s
border barriers to trade, the ‘behind the border’ barriers, and barriers in accessing global markets.
Each type of barrier implies a policy agenda.  The first focuses on creating incentives for efficient
growth by reducing the average level and the dispersion of border protection, eliminating NTBs, and
strengthening the public institutions to ensure that goods cross frontiers with low transactions costs,
i.e., efficient customs regimes that do not create anti-export biases.  The second revolves aroundcreating regulatory standards and policy regimes that ensure that supply responses to liberalization are
efficient, equitable and enduring.  Important issues here include liberalization of trade in service
sectors to enhance competitiveness, policies to promote access to information and technology, and
strengthening institutions to benefit from participa tion in regional and multilateral trade arrangements.
The third focuses on reducing tariff, and regulatory barriers within the framework of international
trade negotiations, especially reducing the barriers against the exports of the poorest countries, which
require additional support to reverse long periods of stagnation and weak institutions
††††††††††††††††††.
(a)  Border barriers and the remaining traditional trade agenda
Border trade barriers continue to be high in three regions:  Africa, MENA and South Asia.
Average (unweighted) tariffs in these regions are in the 20 per cent range or higher, and still have farto fall in order to attain the ten per cent average found in East Asia, Latin America and Europe and
Central Asia.  Within this category, there are three major elements:
Tariffs and NTBs .  Tariff revenue remains important for many low-income countries.
Pursuing further reform of the level and structure of the tariff requires close cooperation with both thegovernment and the IMF to ensure that efforts are made to develop alternative domestic tax bases and
that a reliance on revenue tariffs does not needlessly distort resource allocation incentives.  In the
small number of countries where NTBs continue to be used, elimination of such instruments should
be a priority - tariffication will generally generate revenues.
Determining the incidence of the tariff structur e and the implications of this incidence - for
the poor, for employment, for regions, etc. - is important in mobilizing support for reform.  There is a
need to undertake analysis of the economic implications and effects of prevailing trade policies.  One
useful instrument here is the WTO Trade Policy Review Mechanism, which generates a
comprehensive set of data on existing policies.  Co mplementing such studies with analysis of the
                                                     
****************** This section draws heavily on “Global Economic Prospects” 2001, Chapter 2.
†††††††††††††††††† These also include issues of complying with WTO procedures, design and enforcement
of standards etc.WT/LDC/SWG/IF/15
Page 116
effects of policies - something that is not done by the WTO - would help support reform efforts.  As
the periodicity of WTO reports is very low - at least six years for most low-income economies.  But
the policy environment in these countries are changing very rapidly due to regional and unilateral
policy changes.  It would be well worth complementing these reports with more frequent studies of
the trade and investment regime.  Working with local partners in this regard would help createcapacity and ownership of such efforts.  Currently, very little is being done systemically on this.  As a
result our knowledge is limited and civil society in developing countries with an interest in reform
remains relatively ill-informed.
Customs administration . Experience of successful countries suggests that triggering rapid
trade growth and integration in low-income economies requires strengthening customs regimes and
administration to reduce transactions costs, an ti-export bias and corruption.  Customs clearance
related transactions costs can be a major factor impeding investment in tradable sectors, especially in
activities that are time sensitive or where it is important to be integrated into global production
networks that operate on the basis of just-in-time supply chain management.  From a poverty
reduction and growth perspective it is critical that high priority be given to customs clearance and
streamlining and the elimination of red tape.  Although these areas may be covered by the WorldBank in its country dialogue and operations, a concerted effort is needed if an integrated approach
towards diagnosis and reform is to be adopted.  Potential partnerships and synergy with organizations
that have expertise in this area (WCO, other donor supported programmes, industry associations)
should be exploited to a better degree.
Anti-export bias and export promotion .  In countries where tariffs continue to be needed for
revenue mobilization, it is crucial that exporters have access to imported intermediate inputs at world
market prices in order to be competitive.  This  requires well-functioning tariff duty regimes that
efficiently refund duties paid on imported inputs, or, preferably, allow exporters to import inputs duty
free (so-called temporary admission or green channel treatment).  Implementing such systems requirestraining and institutional strengthening.  Very few low-income countries in Africa and the transition
economies have functioning exemption/drawback regimes, increasing anti-export bias.
(b)  The ‘behind the border’ agenda - complementary policies for poverty alleviation
A strategy for sustained trade expansion and grow th must be framed within an appropriate
macroeconomic incentive environment and be embedded in a comprehensive development andpoverty reduction strategy.  Complementary institutional reform efforts and improvements in the legal
and regulatory environment that increase investor confidence are vital for trade liberalization to serve
as an engine of growth.  Key elements of the associated ‘behind the border’ trade agenda include
adoption of efficient regulatory regimes and institutions that support the participation of national firms
on international markets and measures to enhance their competitiveness by providing access to crucialservice inputs.  Much is being done in these areas under the rubric of Private Sector Development,
however, the international dimension of private sector development activities is often neglected:  e.g.,
fostering international competition on service markets (e.g., transport); seeking to use reforms to
expand exports of services; or making a link between proposed reforms and a country’s commitments
or negotiating position in the WTO.
Market-friendly, pro-development regulation and trade.   Modernization of developing
country standards systems, including institutions and infrastructure related to goods production and
sanitary and phytosanitary standards is a critical part of the new global trade environment.  Efficient
and market-driven standards systems can aid export competitiveness and product quality.  Meetinginternational standards for quality and health and safety is increasingly a precondition for contesting
international markets.  Many low-income countries are not adequately equipped to deal with product
standard requirements.  This is an area that is becoming a major constraint for firms in many countriesWT/LDC/SWG/IF/15
Page 117
and that can require major investments.  Recent examples where standards have constrained exports
include Ugandan fish and South Asian shrimp exports to the EU.
Trade in services .  The efficiency of service sectors is a key determinant of the
competitiveness of national firms.  Liberalization of trade and investment in services should thereforebe a major element of policy reform strategies  An efficient and well-regulated financial sector is
necessary to finance investment and ensure resources are deployed where they have the highest
returns; telecommunications are a vital intermediate input and crucial to the dissemination and
diffusion of knowledge, transport services contribute to the efficient distribution of goods within a
country, and are particularly important in influencing a country’s ability participate in global trade
(the cost of international transport is often higher  than the applicable tariff); and business services
such as accounting and legal services are important in reducing transaction costs.  Research hasshown that the gains from eliminating barriers to trade in services that facilitate trade can easily be a
multiple of those associated with merchandise liberalization  While sectoral projects and adjustment
programmes are frequently undertaken in services sectors, these are rarely an integral part of an
‘integration’ strategy and tend to neglect the beneficial effect of allowing foreign entry and ensuring
that markets are contestable.
Efforts to strengthen private and public institutions that support export development - access
to credit, modernization of product-standards systems and conformity assessment infrastructure to
ensure export market norms are satisfied; and improving the quality and reducing the cost of service
sector inputs - transport, telecoms, insurance, finance, etc. are often pursued on a sector-by-sectorbasis.  What is lacking is an overall framework that identifies priority areas from an integration
perspective (areas where the pay-off for reform is largest).  Careful analysis of the prevailing
economic structure and production chain - focusing on the relevant upstream and downstream markets
- is necessary, but is often not undertaken.
(c)  The global trade agenda
It is important to provide an intellectual framework, data, and analysis to assist LDCs to
maximize the development pay-offs from participa ting in international agreements and multilateral
rule-making.  Through this research, the development implications of existing trade barriers and
multilateral disciplines (including potential agreements that have been proposed and are the subject of
discussion) can be clarified thus ensuring that development becomes the benchmark for negotiatedagreements.  There are four key thematic areas where substantial research and analysis is required  As
at the national level, there is a border and a non-border dimension to the global agenda.  The major
border issue concerns the impact of market access barriers on developing country trade.
Market access for goods and services .  Protection in OECD countries currently imposes costs
on developing countries that exceed aid flows.  Benefits to developing countries from abolishing their
own protection are also significant.  If current policies restricting trade in services, labour, capital and
knowledge are considered, as well as the effect of instruments of contingent protection (anti-dumping
measures, safeguards) and regulatory regimes that give rise to transaction costs (conformity
assessment for standards), it is clear that the benefits of reducing market access barriers are enormous.
Greater market access for the developing countries in general and to the LDCs in particular,
have to be one of the cornerstones of the global strategy.  While benefits from a global reduction in
tariffs, especially in agricultural commodities, are very great, the political economy of further reforms
indicate that significant breakthrough in the short run is not likely.  A modified strategy which has agreater chance of success is to push for the opening of the markets, especially in agricultural products,
to the LDCs, as the first step in the next round of negotiations.  This will have small repercussions on
the economies of the industrial and richer developing countries but will have a significant impact onWT/LDC/SWG/IF/15
Page 118
the exports and incomes of the LDCs‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡.  This might give the needed boost to LDCs in
reversing their marginalization.
Institutions to promote and protect trade in knowledge .  The relative weakness of efforts in
recent years to pursue projects in areas such as intellectual property has impeded the ability of theinternational community to take a stance on a number of the major issues confronting developing
countries in the trade area  This should be an area of focus for research as well as investment and TA
projects.
Rule-making - the global ‘regime’ .  A key issue for developing countries is to ensure that
global rules that are negotiated in multilateral bodies support the development process. One message
that emerges strongly from recent research is that one size fits all - the basic WTO approach - is notappropriate in a number of areas where there are substantial implementation costs and critical
institutional development needs.  Developing a position on priority areas for global cooperation and
reform is important to support autonomous reform actions that are taken by developing country
governments.  In doing this we must draw on country-level experience in determining what types of
cooperation (rules of the game) will support the development process.
(d)  The poverty dimension
Research on trade, growth and poverty has been carried out under two frameworks.  First is
the estimation of the links between openness and growth, and growth and poverty.  In both of theselinks, there is strong evidence that more open trade regimes are associated with faster growth and
there is also a strong link between growth and poverty reduction.  Second is the measurement of the
adjustment costs and benefits of trade liberalization episodes.  Existing research on the adjustment
costs of liberalization is mainly focused on the industrial countries and suggests that these costs are
not large, and the shocks that occur tend to be short-lived.
The disappointing growth performance of many LDCs in the 1990’s and absence of
significant progress in poverty reduction despite significant trade liberalization have generated some
skepticism with regard to these findings.
While the overall direct impact of trade liberalization on the poor as a group might not be
very large, and its long run effect may be expected to accelerate growth and reduce poverty, its impacton individual groups in the short run might be significant.  Surveys show that the poor are very
diverse.  Thus, trade and other associated reforms which affect relative prices and employment
opportunities can reallocate income among vulnerable groups that receive their incomes from
different activities.  Thus, segments of the poor may be hurt by trade liberalization.
Further efforts are needed to analyse the winners and losers in the transition process and
adjust the policies, wherever possible, to take into account the political economy of income
redistribution.  Programmes supporting liberalization have often been complemented by efforts to
strengthen social safety nets, but little has been done to determine what the impact of trade reform on
the poor would be.  Since some of the poor are likely to be so poor that any decrease in incomesimposes extreme hardship, it is important to identify which of the poor may be adversely affected by
reforms and determine the most appropriate set of pro-poor policies to complement trade reform.
The knowledge and tools required to answer some key questions is still
inadequate.
§§§§§§§§§§§§§§§§§§ However, progress is being made.  First, as a part of the PRSP process,
                                                     
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ As expected, our findings indicate that largest gains to LDCs occur when they are given
preferential access to the QUAD markets.WT/LDC/SWG/IF/15
Page 119
there is much better information on the nature, characteristics, and structure of poverty in most of the
LDCs, along with the income sources of most of the poor.  Second, there are large number of episodes
of liberalization undertaken over the last decade that yield important clues on the transmission
mechanisms of trade reforms.  Third, contrary to earlier focus, the service markets in general appear
to play a key role in the determination of po verty outcomes.  The growth impact of services
liberalization can be significant and can help offset adjustment costs of goods liberalization as many
“imports” of services must be locally produced and are labour intensive.  Finally, the evidence
indicates that the effects of trade reforms through the consumption of the poor are much less
significant than the effects of trade reform on the income streams.  This suggests that focus should
heighten on the income effects of reforms and narrows the set of issues to be tackled.
4. Implementing the Integrated Framework:  Some issues
The preceding sections show that much can and needs to be done to help poor countries
derive the benefits of globalization.  It is also clear that policies of trade integration need to be both
owned by the country and consistent with the broader poverty reduction strategy.  In this light, three
aspects appear especially important in supporting trade-related reforms and technical assistance underthe Integrated Framework.  These are: analytical underpinnings of the trade integration strategy;
dissemination and advocacy; and funding and division of labour.
Analytical underpinnings   Any effort to support the integration of low-income countries into
the world economy must start with a diagnosis designed to identify the main impediments tointegration.  The analytical challenge is jointly to evaluate the incentive regime (focusing on the
impact of trade, tax and exchange rate policies on relative prices) and the key ‘behind the border’
issues.  The latter that have proven to be of gr eat importance in determining the success or failure of
integration efforts, and are increasingly being placed on the agenda of international negotiations.
Driving the integration agenda therefore requires development and testing of diagnostic tools that willassist countries to identify priority areas for refo rm.  This analytical/diagnostic work must be done
jointly with teams that are based in the countries and that are completely familiar with the economic
landscape.
Though the PRSP must remain country-driven, donor institutions can assist in its formulation
by identifying impediments, suggesting possible solutions, and more generally providing critical
inputs to the strategy formulation process.  One possibility is to support “Trade Integration Studies”that assess the remaining constraints to successful  globalization and the impact of eliminating these
constraints on economic growth and poverty reduction.  Consequently, priority areas for action
identified by the country in the PRSP may include trade-policy and trade promotion-related action.
Decisions on whether and when the analysis is needed, and on its scope, should evolve from the
country’s setting of development priorities within the context of the PRSP.
The World Bank’s trade group, in cooperation with IF partners, will seek to undertake a few
PRSP country-specific “integration strategies” on a pilot basis in coming months.  There already is
considerable interest on the part of some country departments in supporting these pilots.  These
exploratory discussions have confirmed that efforts to ‘mainstream trade’ must center at first onbuilding tools that are useful to country authorities and to the staff, and on convincing country
authorities that investing resources in the trad e area will have significant development payoffs.
Integration studies should be undertaken with signific ant input from local institutions, will need to be
                                                                                                                                                                    
§§§§§§§§§§§§§§§§§§ Work is ongoing in the context of the PRSP sourcebook and trade and poverty research
to answer more of these questions.WT/LDC/SWG/IF/15
Page 120
highly tailored, and will need to draw as much as possible from the existing stock of knowledge and
update it.*******************
Another important rubric for analytical support is the evolution of market access and of WTO
rules as they affect the developing countries.  The global agenda in these fields is large, complex andpolitically sensitive.  Similar issues often arise in the context of regional agreements, which are
proliferating.  More research (and associated policy implications) is needed on market access, the
development relevance of international rule making  efforts, mechanisms to foster the acquisition,
protection, and generation of knowledge and related assets, and on the link between trade
liberalization and poverty.  Progress on the Integrated Framework requires that research in these areas
should respond to, and be informed by, the national trade strategy/needs that prevail in low-income
countries.  Furthermore, the ‘feedback loop’ from research to operations must includerecommendations related to micro elements such as  the business environment and also cover the
institutional-legal regime, including both product standards and intellectual property protection.
Research in these areas needs to be leveraged through policy messages and tailored to the specific
conditions prevailing in individual countries.  Analysis must be integrated more deeply into dialogue
with governments and made more country-specific.
Especially since many of the issues which comprise the global trade agenda are controversial,
it is important that basic facts, analytical exercises, and the implications drawn for policies affecting
the poorest countries be documented as systematically as possible.  Research in these areas,
adequately disseminated, can help generate a global consensus on policy measures.  The various IFworking group meetings and workshops could usefully devote some time to discussion of the
intersection of the global trade agenda and development policy in the poorest countries.
Dissemination and advocacy   A critical new aspect of the revised IF is the emphasis placed
on the quality of the country dialogue and on creating a consensus within civil society on growth andpoverty reduction strategies.  In short, the measures proposed on trade integration agenda will have to
be placed on the table and participants will need to buy in.  More intensive consultation and
dissemination will be necessary.  The mere existence of a compelling study would not guarantee its
inclusion in the growth strategies adopted.
Broad dissemination, including seminars and close cooperation with the country teams
working on the PRSPs will be critical for the successful inclusion of the trade policies andinstitutional reforms into the development strategy.  Again, the exact modalities of what needs to be
done will depend on the specific circumstances of each country.  Therefore, an explicit dissemination
strategy will need to be developed for each trade integration study.
Similarly, the policy implications of research on global issues needs to be disseminated both
in developing as well as in industrial countries.  Instruments range from briefing the key ministers to
educating the public on the outstanding issues through the mass media.
Funding and division of labour.   Identifying more explicitly the appropriate division of
labour among agencies is important to implementing the IF effectively.  One of the reasons cited fordisappointing progress under the original IF was lack of clarity among agencies with respect to their
respective roles.  Which agency will carry out what activity?  How will they participate in the PRSP
process?  In which countries? How will the findings be discussed and general agreements on the
appropriateness of the recommendations be reached?
                                                     
******************* Earlier efforts included work being done under “ Trade Expansion Project” for a group
of countries. Given the changes in the policy regimes, and more limited resources, these studies will be more
focused and made more country specific.WT/LDC/SWG/IF/15
Page 121
A issue related to this is the organization and funding of the diagnostic studies and their
dissemination.  Currently resources allocated to these tasks by the international organizations are very
limited, and diagnostic studies are competing for attention with other research and policy work.  Thus,
critical decisions have to be made on the sources of funds, changes in own budgets in the participatingagencies, and the institutional arrangements for their use.
The PRSPs and the trade integration studies are expected to generate proposals for policy and
institutional reforms as well as to unveil physical investment needs.  Once these programmes and
projects are identified and sequenced, they will need to be prioritized and funded.  While it is
expected the CGs and UN Round Tables will be the primary vehicles determining funding, it is also
important to leave adequate room for funding key trade-related activities.WT/LDC/SWG/IF/15
Page 122
ANNEX
Outline for a Trade Integration Study
Each trade integration study will have to be tail ored to the specific needs of each country, and
to the framework proposed by the country itself.  However, there are certain areas that have been
identified as important constraints for the integration of LDCs.  These areas will probably be
reflected, in one form or other, in the integration studies.  As a general principle, the starting point of
all the studies will be the reforms undertaken and the activities that have grown in response to the
reforms.  The basic question will be the specific policies and other interventions that are needed to
expand and broaden the response that is taking place, or was expected to take place under the reforms.
The study will also have to focus on the sectors and areas where the interim PRSPs have identified asthe key areas where the countries have decided to focus.
Integration studies will typically have five components:
First is a review and analysis of the country’s growth and integration performance in
historical and international perspective.  Particular attention will be paid to indicators of integration
vis-à-vis those of comparator countries, such as the export and import to GDP ratios, the FDI to GDP
ratio, the speed and extent of export diversification.  The analysis of these indicators will be forward
as well as backward looking, and involve assessing the relative importance of domestic policies and
external factors accounting for observed trends.
Second  is the macroeconomic environment and the country’s investment climate, especially
the behavior of the real exchange rate during the process of liberalization.  Research has identified
real exchange rate behavior as a key determinant of the supply response in liberalization episodes.
Appreciation and high volatility of real exchange rates lead to import surges and reduce theprofitability of export and import substitution activities.  More important, by increasing uncertainty
about future profitability, high real exchange volatility lowers investment in tradable activities.  In this
section the areas that can be covered are:
• Historical behavior of real exchange rates and its impact on the supply response,
especially on the key activities and subsectors.
• Institutional arrangements for exchange rate management, especially whether they are
designed to be flexible, and reflect the underlying productivity of the real economy.
• The structure and constraints in efficient operation of the foreign exchange markets,
and whether they can be improved to yield more competitive and stable real exchange
rates.
Third  component focuses on international policy environment and specific constraints that
the exports from each country face in the international markets.  In many countries policy
recommendations on export promotion have been made without paying attention to the trade
restrictions in the importing countries.  This section will have three dimensions.
The documentation of the specific set of trade restrictions (and preferential trade
arrangements) that exist in industrial country markets for the existing and potential export products.
This will allow the LDCs to have reliable information to argue for greater market access in the global
forums, as well as adjust their policy interventions as not be penalized by the restrictions in the world
markets.WT/LDC/SWG/IF/15
Page 123
• Analysis of the implications of greater market access for the existing and potential
export commodities. †††††††††††††††††††
• Benchmarking of these countries both on their policy reforms and their performance
vis-à-vis other developing countries both within its region and other regions.
Fourth component focuses on the key sectors where some export response has taken place, or
is expected to take place, and analyse the constraints that these sub sectors face in expanding to the
rest of the world.  It will cover primarily the specific internal constraints that these product groups
face.  These analyses will be focused on the priority subsectors, which will be determined after the
initial consultations, in line with the broad pr iorities that are being incorporated into the
PRSPs‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡.  While these constraints will vary among countries, there are a series of
common constraints that have been identified:
• Transaction costs such as transportation, customs facilitation, duty free access to
intermediate inputs, availability of export credit and availability and cost ofcommunications and energy.  Research indicates that these constraints and higher
costs are as important in making the products from LDCs less competitive as the level
of efficiency within the firms.
• The regulatory environment for the subsectors such as the rules of entry and exit,
inspections, and other regulations that constrain the ability of the firms to adjust.
• To the extent relevant, constraints posed by the global rule making such as the
product and other standards, intellectual property protection, new customs rules andvaluation, etc.
Finally , the impact of the recommended policies on the level and structure of poverty will be
evaluated.  The availability and the coverage of the poverty assessments will determine the nature and
the extent of this part.  To the extent that the income streams of the poor and their sector of origin are
available, the quality and the precision of the analysis will be broader.  Under such circumstances,
analyses of winners and losers from the policy changes can be explicitly analysed and specificpolicies to minimize their impact on the poor can be developed.
Susan Prowse , Senior Economic Adviser, Department for International Development (DFID), UK
                                                     
††††††††††††††††††† While the implications of trade liberalization for the developing countries have been
made on an aggregate and regional basis, there are very country specific analyses of the constraints and benefitseach country face in the industrial country markets.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ For example, in the initial discussions on the trade integration study for Madagascar,
four areas were identified as the priorities; these ar e: Garments, tourism, Mining (large and small) and
Agriculture. The report is expected to analyse the key policy and institutional constraints on the expansion of
these sectors, and provide specific recommendations and options on how to overcome these constraints.WT/LDC/SWG/IF/15
Page 124
PANEL E:  PRESENTATIONS
Richard Carey , Director, DAC/OECD Secretariat.
Chiedu Osakwe , Head, Secretariat Working Group for LDCs/IF, WTO.
"The Challenges of Technical Assistance: A Poli cy Framework, Funding and the Moral Hazard"   
(Discussion draft )
Introduction
What is technical assistance, and how important is it in assisting the integration of LDCs into
the multilateral trading system and the global economy?  Can it assist LDCs to meet some of the
challenges of globalization and take advantages of its opportunities?  What roles should agencies,
donors and the LDCs themselves play in the delivery of technical assistance?  What are the currentproblems in the delivery of trade-related technical assistance?
Technical assistance is the means for building human, institutional and infrastructural
capacity.  It encompasses programmes and projects, designed to enable the attainment of key defined
objectives, such as for integration into the multilateral trading system, and the global economy.  Theobjectives and positive outcomes of technical assistance activities should be considered as public
goods, activities that produce benefits, which cannot efficiently be delegated or left to private
enterprise alone. National governments and external  agencies need to step in to provide this
international and national public good.  Technical assistance is a vital component of a series of
support measures for the Least-Developed in building capacity for trade development, and foraccelerating their integration into the trading system and the global economy.  However, it is only
supplementary to domestic efforts at efficiently al locating resources and investing in such critical
areas as education, human and institutional capacity-building.
The problem is that over time, technical assistance has been delivered, almost randomly,
frequently indiscriminately and on a stand-alone basis.  There continues to be an increasing vertical
multiplicity of technical assistance initiatives (programmes and projects), with little horizontalcoordination.  Technical assistance has been delivered with little thought to a coherent overall
development policy framework, in which trade priority  areas of action need to be integral, to improve
the chances of accelerated growth for poverty reduction and development.  Furthermore, the
uncoordinated rush to respond to the ever-increasing cascade of technical assistance demands has lent
itself to the risk of a moral hazard, in which distortions in behaviour have arisen because of the virtualguarantee of receiving technical assistance.  In addition, ownership of programmes and projects is not
optimal and in many cases absent. In the prevailing situation, technical assistance is largely delivered
outside of a policy framework; there is a reluctance to share costs with technical assistance providers;
and, in some cases, there is no negative consequence to be suffered for deliberate errors of
management.
The challenge, therefore, facing technical cooperation today is to achieve better coordination,
amongst all stakeholders of the multiple initiatives; to deliver technical assistance within a coherent
policy framework, focused on increasing growth and alleviating poverty; and, to ensure that in the
design of technical assistance programmes and projects, the risk of a moral hazard is not created, inwhich distortions will arise because of the virtual guarantee of technical assistance, which neither
requires ownership nor insists on shared costs.WT/LDC/SWG/IF/15
Page 125
Technical assistance should aim to assist LD Cs to implement their multilateral obligations
and commitments and, at the same time, enable them to grow and eliminate poverty, through
integration into the global economy, and by making use of the opportunities of an open, rules-based
system.  Consistent with these aims, technical as sistance should be targeted at building-up LDCs'
capacity to effectively participate in a new Round of Multilateral Trade Negotiations, based on adevelopment agenda, which addresses all outstanding issues in a systematic, fair and comprehensive
manner.  These objectives of technical assistance are consistent with the original IF objectives.
The basic aim of the Integrated Framework (IF) , as conceived and adopted at the High Level
Meeting
§§§§§§§§§§§§§§§§§§§ in October 1997, was to "seek to increase the benefits that LDCs derive from
the trade-related technical assistance (TRTA) available to them".********************  It was envisaged
that there were gains and savings to be made from better co-ordination among providers of technicalassistance, and that a "demand-driven" approach, with the needs being identified by the LDCs
themselves would serve the objective of increasing the efficiency of technical assistance delivered not
just by the six core agencies, but from other multilateral, regional and bilateral sources.
Notwithstanding the design, 3 years of IF implementation made evident several problems, which are
now being addressed.
The lessons drawn from the five Round Tables  that were held showed that there were
additional and missing elements in some of the means applied, and in the absence of an overarching
framework. The design had not provided for prioritization and sequencing of trade-related TA.  It did
not provide for a policy framework or define a process for mainstreaming trade into the overalldevelopment plans and poverty reduction strategies of LDCs.  The IF was also an unfunded mandate,
at the time.  The emphasis, at the time, was simply on LDCs' Needs Assessments.
The concept and issues involved in mainstream ing are discussed in depth in several of the
papers prepared and to be presented at the IF Seminar – The Policy Relevance of MainstreamingTrade into Country Development Strategies: Perspectives of LDCs.  However, the re-thinking and
lessons to be drawn following from the Seminar, are useful not just for LDCs, but for the core
agencies and donor community at large as well, who should draw and build best-practices, in ensuring
that appropriate linkages and mainstreaming in aid and trade policy frameworks are re-inforced from
the perspective of donors and agencies too.
††††††††††††††††††††
Technical Assistance for LDCs - The WTO Perspective
With 29 LDCs as Members, and a further nine currently in the process of accession to the
WTO, LDCs as a group constitute a substantial proportion of existing and future WTO
Membership.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ The Marrakesh Agreement establishing the WTO is mindful of the
vulnerable position and special needs for economic development of LDCs.  The WTO Agreements,Ministerial Declarations and Decisions, accordingly include a number of provisions in favour of least-
developed and developing country Members.
§§§§§§§§§§§§§§§§§§§§  Of these, provision upon request of
                                                     
§§§§§§§§§§§§§§§§§§§ The High Level Meeting (HLM) on Integrated Initiatives for the Least-Developed
Countries' Trade Development, Geneva, 27-28 October 1997.
********************  Paragraph 2, WT/LDC/HL/1/Rev.1
††††††††††††††††††††  See for example DAC/OECD Secretariat "Capacity Development for Trade in the
New Global Context" DAC (2000), for initial work and progress reported in preparing a set of Guidelines on
Capacity Development for Trade.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ As of 31 December 2000, there are 140 WTO Members, a further 28 countries are in
the process of accession.
§§§§§§§§§§§§§§§§§§§§  There are 146 special and differential provisions in the different WTO Agreements.
The provisions in favour of developing and some specifically for LDCs can be classified into five categories a)
measures aimed at increasing trade opportunities; b) provisions safeguarding the interests of theWT/LDC/SWG/IF/15
Page 126
technical assistance, by the WTO Secretariat and by Members on a bilateral basis, is called for in the
Agreements and is needed in many instances for the full and effective implementation of WTO
Agreements.  With transition periods expiring, this task has assumed a greater urgency, as LDCs are
at various stages of implementation of their rights and obligations as embodied in the WTO
Agreements. Moreover, technical assistance and capacity building is also needed for effectiveparticipation in future rounds of multilateral trade negotiations and integration into the rules-based
trading system. Priority and resources committed in this regard by all concerned stakeholders assumes
significance.  The Guidelines for WTO Technical Cooperation, adopted by the Committee on Trade
and Development,
********************* accords p riority for WTO technical assistance to LDCs.  Nearly 40
per cent of all WTO technical assistance resources are focussed on LDCs.
The Integrated Framework is an indispensable mechanism for meeting the technical
assistance needs of LDCs.  However, as pointed out by Mike Moore, Director-General, WTO;
"For the WTO to be an effective partner in this process, we need to increase our resources for
technical assistance and training.  Even with much greater involvement in future of the Bank
and the Fund, providing assistance in all matters relating to implementation of WTOobligations remains the responsibility of the WTO and its Members.  That is why I am
continuing to look to improve and regularize the funding of the WTO's technical cooperation
activities.  We need a regular budget sufficient to enable us to plan two or three years ahead
and respond to increasing demands.  We have made some progress here, and new avenues for
resources are being studied".
†††††††††††††††††††††
The programme for the delivery of the technical assistance to LDCs,‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ and
priorities identified are based on needs assessments,§§§§§§§§§§§§§§§§§§§§§ individual requests from LDCs
as well as priorities identified in seminars and courses organized for LDCs. It is expected that the
"mainstreaming" of trade priorities into the LDCs overall development objectives as envisaged inimprovements suggested for the IF, initially on a pi lot basis, would also guide future delivery of
assistance provided by the WTO. The technical assistance aimed at human and institutional capacity-
building for better understanding of and participation in the multilateral trading system, includes
different modes of delivery described hereunder, including co-ordination and joint programming
under the aegis of JITAP and the IF:
1. Trade Policy Courses:  Since the HLM, on an  annual basis, a three-week Short Trade Policy
Course  specifically for participants from LDCs has been organized by the WTO. The next three-week
Trade Policy Course is scheduled in Septembe r 2001, in Geneva. In addition, the WTO organizes
regular three month Trade Policy Courses thrice a year, where LDCs also participate.
2. National Seminars: Seminars in individual LDCs have been organized, to provide an
overview on the multilateral trading system and disseminate information on the functioning, basic
rules and principles of the WTO and its Agreements.  Some seminars have been organized jointly
with other organizations such as with the partic ipation of the ITC (Chad, Madagascar and Rwanda)
and with UNDP (Djibouti and Niger).
                                                                                                                                                                    
developing/LDC Members; c) flexibility of commitments; d) (extended) transitional time periods and; e)
provision of technical assistance.
*********************  WT/COMTD/8.
††††††††††††††††††††† "Coherence in Global Economic Policy-Making.  WTO Cooperation with the IMF
and the World Bank", Mike Moore, Director-General, Stat ement to Informal Meeting of the General, 18 January
2001.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ A programme of TRTA for LDCs in 2001 is contained in WT/LDC/SWG/IF/7/Rev.1.
§§§§§§§§§§§§§§§§§§§§§  IF Needs Assessments and Integrated Responses contained in WT/COMTD/IF/1 to
40.WT/LDC/SWG/IF/15
Page 127
3. Regional Seminars: Specialized regional seminars focusing in depth on specific WTO
Agreements and provisions, have been held, at which LDCs’ officials and representatives from the
private sector and academic institutions have participated. Most regional seminars held and planned
are focussed on specific subjects, for example on customs valuation, agriculture (mandatednegotiations), market access, trade and environment and TRIPS. Cooperation with regional and sub-
regional organizations in preparation of these activities has been pursued.
4. Technical Missions: technical missions typically are carried out for assistance in meeting
notification obligations, issues relating to the ad aptation of LDCs' legislation or implementation of
commitments to WTO disciplines, and assistance in WTO accession.
5. Establishing modern data processing facilities ("Reference Centres"): In response to requests
for assistance to establish modern data processing facilities and provide better communication and
information technology links, the WTO Secretariat has begun work to install computers and Internet
links in the trade or commerce ministries of least-developed and other developing countries.  To date,
WTO has opened “Reference Centres” in 39 LDCs.
6. Joint Integrated Technical Assistance Programme (JITAP): The Joint Integrated
WTO/UNCTAD/ITC Technical Assistance Programm e for Selected Least-Developed and Other
African Countries (JITAP) was initiated in Ma y 1996. This programme currently covers eight
developing countries, including four least-devel oped: Benin, Burkina Faso, Tanzania and Uganda. It
responds to the need of least-developed and other African countries to be assisted in the expansion
and diversification of their trade and in the process of their integration into the multilateral trading
system. In 1998, a Common Trust Fund (with a proposed budget of approx. US$10 million) was
established to finance country projects by the three organizations involved.
The modes of delivery and programming have and continue to evolve, in the face of changing
demands and requirements for the effective delivery of technical-cooperation.********************** Th e
WTO was and is not conceived as a development-cooperation agency. Our budget and resources
available for technical assistance reflects this. However, with an expanding Membership (the majority
of which are either developing or LDCs), the demand placed on the Secretariat for technical
assistance has outstripped the supply and existing capacity to deliver. Meeting ad hoc requests, is
second-best to developing and delivering feasible multi-year programmes of assistance, formulatedand mainstreamed into the LDCs overall development and poverty reduction strategies.
As discussed in greater detail in the sections of the paper focussing on the policy framework
and funding issues, there are potential synergies that link trade reform and liberalization, with
economic growth and an increase in employment, th ese opportunities when realized, can in turn form
an integral part of the poverty reduction strategy.  Trade priorities should and must not be seen in
isolation of development objectives, for this reason, the technical-assistance should be provided
within a policy context to assist openness, growth -friendly and market-oriented trade regimes, in a
manner that can further assist LDCs to better participate and integrate into the multilateral trading
system and global economy.
Policy Framework
The importance of appropriate linkages of the IF and trade-capacity building priorities to the
overall development architecture, in the context of Poverty Reduction Strategy Papers (PRSPs), the
                                                     
********************** Issues pertaining to programming, delivery, funding, monitoring and evaluation,
have been discussed extensively by WTO Members, including at the "Days of Reflection on Technical
Cooperation" in July 2000.WT/LDC/SWG/IF/15
Page 128
Comprehensive Development Framework (CDF), and the UN Development Assistance Framework
(UNDAF) was stressed as one of the key findings of the independent review of the
IF.†††††††††††††††††††††† As a result, Heads of Agencies in their Joint Statement, decided in favour of
"mainstreaming" trade into development and poverty reduction strategies.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡   In their
decision, they agreed to:
" ... to make every effort to support the integration of trade, trade-related technical assistance,
and capacity-building into the national development strategies and plans of LDCs.  This
would be ensured principally through such instrument as Poverty Reduction Strategy Papers
(PRSPs) and would influence other development frameworks such as the United Nations
Development Assistance Framework (UNDAF). In doing so, these efforts will ensure
dynamic interaction and dialogue among LDCs, donors and agencies, fully respecting countryownership. "
Effective delivery of TRTA and trade-related capacity building, require an appropriate policy
setting.  Trade liberalization and reform as well as the effective integration of trade priority areas of
action into national developments plans are essential requirements.  Technical assistance to strengthenhuman and institutional capacity-building (as well as to address trade-related supply-constraints) will
not have the desired impact, and may well be affected by distortions in domestic trade and related
companion regimes, unless there is an appropriate domestic policy setting.
Several of the papers presented at the seminar, examine the mechanics of operationalizing the
concept of mainstreaming and the need for an appropriate policy framework.
§§§§§§§§§§§§§§§§§§§§§§ The
DAC Secretariat, in preparing the Guidelines on Ca pacity Development for Trade, also include:  (a)
the importance of mainstreaming trade into country-sp ecific poverty reduction strategies (PRSPs);  (b)
facilitating the emergence of a strong country-level trade policy process;  (c) identifying needs and
constraints; and (d) providing a roadmap for effective donor policies and instruments.
While the importance of a coherent policy framework in LDCs cannot be overemphasised, the
need for a liberal, open and predictable market access for LDCs is a priority area for policy attention
amongst LDCs' major trading partners.  In other wo rds, a policy approach that assists LDCs trade
integration may be developed by donors as well, and could include enhanced support for trade-
capacity and prioritized TRTA needs of LDCs and for "duty-free quota-free" access for LDC exports.
The incentive for LDCs to enhance their capacity for tr ade is so that they can export to open markets.
Trade-Related capacity-building should, therefore, be complemented by improved market access for
LDCs, which following recent notifications by WTO Members has taken a positive upward turn.
Trade reforms and liberalization are essential for growth, poverty alleviation and development
for LDCs, and for their effective integration into the multilateral trading system and the globaleconomy. However, it must be noted, as mentioned in the recent White Paper on International
Development, that while there are potential gains from trade, trade openness is a necessary but not
sufficient condition for poverty reduction.  The extent to which trade openness contributes to poverty
reduction depends on broader economic and social circumstances and policies.  Trade policy needs to
                                                     
††††††††††††††††††††††  WT/LDC/SWG/IF/1.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ WT/LDC/SWG/IF/2.
§§§§§§§§§§§§§§§§§§§§§§  Papers by Richard Carey: on DAC/OECD, Good Practices and Guidelines on
Capacity Development for Trade;  M. Ataman Akso y and Uri Dadush: Tackling the Trade Agenda in the
Poorest Countries; Richard Eglin: Mainstreaming and Economic Policy Reform and; SWG on IF/LDCs and
Sarath Rajpatirana: Policy Relevance of Mainstreaming Trade with Country Development Strategies.WT/LDC/SWG/IF/15
Page 129
be situated within the wider development context.***********************  Mainstreaming is the potential
means of immersing trade and trade policy into the broader development paradigm.
Funding
Bearing in mind the ever-increasing demands for TRTA, the resources both financial and
human, which are available for the delivery of requested assistance, are not be enough to fund all
needs and priorities. The needs and demands exceed available resources.  The total funding of nearly
US$190 million, requested at the five IF Round Tables held to date††††††††††††††††††††††† would suggest
that while an "unfunded mandate" may not be acceptable, incremental resources would at best be
useful in alleviating some, not all, of the trade-capacity needs of LDCs.
Mainstreaming TRTA and trade-integration strategies into the PRSPs and UNDAF, and the
subsequent presentation of identified and coherent priorities at World Bank Consultative Group (CG)
or UNDP Round Tables respec tively, is the more realistic option for further resource mobilization
under the IF.  However, mainstreaming and in-country coordination in itself have costs. Estimates
range from between US$200,000 to 300,000 needed per country.  The establishment of an IF TrustFund, on a pilot basis, is in this regard is a useful first step.
Viewed in the context of resources needed for sectors such as health, education, housing,
basic infrastructure - assistance and funds for trade-related capacity building and technical-assistance
constitutes just about four per cent of all ODA. There are a number of multilateral, regionalorganizations and bilateral agencies providing technical assistance, and a listing of the main sources
are compiled in the WTO "Guide to Sources of TRTA".
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡
The allocation of funding for TRTA varies across organizations. The WTO Secretariat's
annual budget, allocates about Swiss Francs [ ] million to technical cooperation,§§§§§§§§§§§§§§§§§§§§§§§
though this is supplemented by extra-budgetary resources and voluntary contributions to WTO Trust
Funds of up to 10 million Swiss Francs.  Apart from the regular budget of 30 million Swiss Francs,
the International Trade Centre (ITC),  provides technical assistance of approximately US$12 million
through extra-budgetary contributions, some 40 per ce nt of this assistance is provided to LDCs.
UNCTAD, with an annual operational budget of approximately US$50 million, expends about US$24
million for technical assistance, financed from extra-budgetary resources. 40 per cent of this
assistance is for LDCs.  The IMF allocates over 18 per cent of its budget for technical assistance,although not all for trade-related technical assistance.  In 2000, concessional lending by the World
Bank totalled US$15.3 billion. UNDP's, portfolio of on-going trade-related projects and programmes
is budgeted at over US$140 million, including cost-sharing and counterpart funds.
Bilateral donors have also begun to significantly raise emphasis and understanding of the
importance of trade issues, among officials deal ing with ODA.  For instance, the White Paper on
International Development, prepared by DFID, r eaffirms the commitment of harnessing the gains
from trade, as a vehicle for making globalization work for the poor.  Significantly assistance for trade-
                                                     
*********************** "Eliminating World Poverty: Making Globalization Work for the Poor", December
2000, DFID.
†††††††††††††††††††††††  IF Round Tables have been held in Bangladesh, The Gambia, Haiti, Tanzania and
Uganda.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Guide to Sources of TRTA, Version 1 (Nov 2000), is available at the WTO website
(www.wto.org).
§§§§§§§§§§§§§§§§§§§§§§§ The WTO's Annual Budget is about Swiss Francs 125 million.WT/LDC/SWG/IF/15
Page 130
related capacity building is also to be doubled.************************  This trend bodes well for the
future.  LDCs should seize the opportunities by ensuring appropriate and coherent domestic policy
frameworks in order to absorb the evident expanding opportunities.
Conclusions – facing up to the Moral Hazards
From 24 countries originally classified by the UN as LDCs in 1971, there are 48 countries at
present classified as LDCs.††††††††††††††††††††††††  Only one country, Botswana, in 1994, has graduated
out of LDC status.  Reversing this trend is and should be a priority among the development
community at large and the LDCs themselves.  Fo r example, Lao PDR, at its Seventh Round Table
Meeting, undertook as its over-arching development goal to graduate from the group of LDCs by the
year 2020, through sustained growth with equity.‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Such initiatives on the part of
LDCs' themselves should be commended and supported.  Intentionally or otherwise, incentives should
not exist for countries to opt to become categorized as LDCs, or to seek to delay their exit.
LDCs' share in world trade has been declining and is currently less than 0.5 per cent.  The
challenges they face are compounded by a vicious circle (the poverty trap) of low incomes, lowsavings, and inadequate investment, leading to aid dependence and debt burden.
§§§§§§§§§§§§§§§§§§§§§§§§
The attention and focus on alleviating supply-side and policy constraints for effective integration andparticipation in the multilateral trading system is long overdue and welcome. Coupled with existing
and proposed preferential market access for LDCs exports, a basic framework for the integration of
LDCs is shaping up. LDCs themselves, together with  the support of their development partners, must
now rise to the challenge to work to graduate out of their current predicaments.
                                                     
************************ "Eliminating World Poverty: Making Globalization Work for the Poor", December
2000, DFID. The Government of UK plans to double funds committed to trade-related capacity from the present15 million Pound Sterling to 30 million Pound Sterling over the next three years.
†††††††††††††††††††††††† The designation of a country as least-developed by the UN is based on a meeting a
number of agreed economic and social criteria. Originally set in 1971, the benchmarks are periodically revised.
The indicators currently used are: a) per-capita GDP; b) augmented physical quality of life index; c) economicdiversification index; and d) population.
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ Government Report to the Sev enth Round Table Meeting, November 2000,
Vientiane, Lao PDR.
§§§§§§§§§§§§§§§§§§§§§§§§  The "Development Finance Problem" see UNCTAD – Least-Developed Countries
2000 Report.WT/LDC/SWG/IF/15
Page 131
General Bibliography
Robert Anderson, and Prof. Frédéric Jenny, "Internal Reform as a Necessary Condition for Realizing
the Benefits of Trade Liberalization: The Case of Regulatory Reform and Competition Policy"; paper
presented at the Integrated Framework Seminar on, The Policy Relevance of Mainstreaming Trade
into Country Development Strategies – Perspectives of LDCs, Geneva, 29-30 January 2001;
Dollar, David, "Outward-Oriented Developing Econom ies Really Grow More Rapidly: Evidence from
95 LDCs, 1976-85", Economic Development and Cultural Change 40(4):52-44), 1992;
Kaul, Inge, Grunberg, Isabelle,  and Stern, A, Marc, eds, "Global Public Goods: International
Cooperation in the 21st Century (New York: Oxford University Press for the United Nations
Development Programme, (1999);
Sachs, Jeffrey D., and Andrew Wa rner, "Economic Reform and the Process of Global Integration",
Brookings Papers on Economic Activitiey, No: 1, Washington, D.C., Brookings Institution (1995);
Sarath Rajapatirana, The Trade Policies of Developing Countries. Recent Reforms and New
Challenges, (The AEI Press, Publisher for the American Enterprise Institute, Washington, D.C.),
(2000);WT/LDC/SWG/IF/15
Page 132
PANEL F:  WRAP UP
H.E. Mr. Jonathan Fried, Senior Assistant Deputy Minister, Department of Finance, Canada,
CONCLUDING REMARKS BY MR. JONATHAN FRIED,
SENIOR ASSISTANT DEPUTY FINANCE MINISTER, CANADA
Integrated Framework Joint Agency Seminar:
The Policy-Relevance of Mainstreaming Trade into Country Development Strategies
– Perspective of the Least-Developed Countries
World Trade Organization, Geneva
29-30 January 2001
In Panel F: the Wrap-up session, the seminar noted the concluding remarks by Mr Jonathan
Fried, Senior Assistant Deputy Finance Minister of Canada, on his personal responsibility.  The
remarks are as follows:
A sustainable development strategy requires, inter alia , approaches that are pro-poor and pro-
growth to achieve the globally agreed poverty reduction targets for 2015:
- pro-growth, because private savings and investment generate wealth necessary to
fund public goods and investment in social infrastructure; and
- pro-poor, because developing appropriate macroeconomic, fiscal and regulatory
frameworks necessarily entails adjustment to a globalized economy which in turnrequires investment in health, education and social infrastructure.  This is required to
look after the most vulnerable and to ensure equitable income distribution.
Improving the ability of LDCs to take advantage of the benefits that liberalized trade can
provide is, in most countries, subject to the empi rical evidence, a key element supporting the creation
of a pro-growth environment.
Trade should properly be "mainstreamed" into national development plans, i.e. trade should
be integrated into development strategies, while recognizing the efforts already made by many LDCsto lower trade barriers autonomously, acknowledging discussions at the WTO on mainstreaming trade
into development and noting the prospects for improving market access in all countries through the
early launch of new trade negotiations.
Mainstreaming trade must be seen as but one part of a pro-growth development strategy,
supporting a stable macro-economic and fiscal policy framework and pro-competitive regulatorypolicies and rule of law through enforcement of contracts.
Sequencing is key.  Trade benefits will not likely flow to LDCs unless trade liberalization is
synchronised with the development of a sound economic framework at home and alongside
appropriate social infrastructure.
Country ownership is essential.  This requires effective coordination across ministries in
government, and partnership between the government and private sector participants in the economy,
as well as partnership between the recipient government and donor agencies.WT/LDC/SWG/IF/15
Page 133
Donor coordination among bilateral donors, within and between multilateral and regional
agencies and even at the country level "on the groun d" is lacking and in need of improvement. There
are too many reports and frameworks and there is too little coordination.
The general mood of the seminar was supportive of the IF as a promising platform that, if
implemented well as a shared responsibility among donors, recipients and multilateral agencies alike,can promote mainstreaming of trade and improved donor coordination within a country-owned
Poverty Reduction Strategy Paper (PRSP) framework through the country assistance strategy (CAS)
process.  It might also provide a model for cost-sav ing in delivery of trade related technical assistance
and capacity-building through improved coordination.
Funding of a trust fund to permit an improved IF process to be tested on a pilot project basis
was broadly supported.
As with any well-administered program, ongoing evaluation is key.  The case studies on
trade-related technical assistance in Asia-Pacific and Sub-Saharan African countries provide
important lessons for future programs, including regarding the autonomous liberalization undertaken
and proposed by both developed and developing countries.
The Trade Policy Review (TPR) process could be enhanced to provide better guidance to
LDCs on trade rules and liberalization within the broader context of national development plans.World Bank, IMF and bilateral country directors could be invited to participate in the TPRs.
Improved statistics would be of immeasurable assistance to donors.
The results of this seminar as well as its papers and presentations should be forwarded to
those responsible for preparations for the Third UN Conference on Least-Developed Countries (LDC-
III), the UN Conference on Financing for Development, and bilateral, regional and multilateral donoragencies.
NOTE
Participants agreed to request the Director-General to circulate the outcome of the seminar to:
- the Okinawa Workshop on Trade-Related Capacity-Building, 2-4 March
2001;
- Third United Nations Conference for Least-Developed Countries, Brussels,
14-20 May 2001;
- The Meeting on Financing for Development (FFD); and to,
- other multilateral and regional institutions and bodies.WT/LDC/SWG/IF/15
Page 134
BACKGROUND PAPERS
Chiedu Osakwe************************* and Sarath R a japatirana†††††††††††††††††††††††††
The Policy Relevance of Mainstreaming Trade with Country Development
Strategies - Perspectives of the Least-Developed Countries
Maximum speed is required by developing countries, including the Least-Developed in
mainstreaming trade into development plans and poverty reduction strategies.  There is no greater
challenge that faces LDCs today than increasing growth rates for poverty alleviation and
development.  Although the evidence is clear and unambiguous on the benefits from trade reform andliberalization, however, openness to trade is only one of the pieces of a complex puzzle.  Supportive
companion policies are required for the full benefits of trade reform and liberalization to be fully
enjoyed.  The Integrated Framework for Trade-Related Technical Assistance is a vital mechanism for
assisting the process mainstreaming trade priority areas of action into development and poverty
reduction strategies.  This joint paper explores approaches to mainstreaming, the core issues and howmainstreaming is actually undertaken.
The Heads of Agencies of the six core Agencies, at their 6 July 2000 meeting, re-affirmed
their commitment to the Integrated Framework, and noted the success achieved in coordination of the
work of these agencies.  They agreed to support mainstreaming, as an important aspect of assisting theintegration of LDCs into the trading syst em, to grow, alleviate poverty and develop.
The proper strategies need to be identified for mainstreaming the IF using such development
vehicles as the Poverty Reduction Strategy Papers (PRSPs), the United Nations Development
Assistance Framework (UNDAF ) and the Country Assistance Strategy (CAS).  The six core Agencies
agreed that the World Bank, as part of its mandate, will assume responsibility for mainstreaming.  The
challenge is twofold: it involves not only how best to integrate the IF into these instruments and
development vehicles, but also a clear understanding  of the processes and the steps required for a
successful mainstreaming of trade priority areas of action into national plans for development and
poverty reduction.
This paper outlines some of the core issues, the approaches and the processes that are key to
successful mainstreaming, for which the World Bank has responsibility, and on which UNDP will
also play a key role because of operational country presence.  The paper, inter alia , examines the
policy-relevance of mainstreaming from a developing country perspective.  It is not, however,
exhaustive.  There are several limitations.  It also recognizes the challenges that confront the core
agencies, external donors, the LDCs themselves, and other stakeholders.
This seminar is the first attempt to address th e subject of mainstreaming a trade integration
agenda into country development and poverty reduction strategies.  We hope that the issues we have
raised and approaches suggested, will generate more ideas and a refinement of the best way in which
to address this urgent challenge.  We hope to develop the ideas contained in this paper in futureseminars.
                                                     
************************* Head of the Secretariat Working Group for LDCs and the Integrated Framework.
††††††††††††††††††††††††† Head of the Independent Team that reviewed the Integrated Framework (IF) for
the Core Agencies.  See Report: WT/LDC/SWG/IF/1, 29 June 2000.WT/LDC/SWG/IF/15
Page 135
I. INTRODUCTION
The representatives of the six core agencies‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ of the Integrated Framework
for Trade-Related Technical Assistance to the Least-Developed Countries (IF) met on July 6, 2000 to
discuss the mandated review§§§§§§§§§§§§§§§§§§§§§§§§§ of the IF done by an independent team. While
accepting the principal recommendations of the review, the representatives reaffirmed their
commitment to the IF.  The IF has as its primary objective, the integration of the Least-Developed
Countries (LDCs) into the world economy in a ma nner supportive of overall economic development
objectives, and in particular poverty reduction.  Despite reforms, the continued weakness in the
performance of the LDCs over the past decade makes the attainment of the objectives of the IF more
important than ever before.  Moreover, the increasing  evidence that greater integration with the world
economy is crucial for economic growth underscores the important role that the IF can play inmeeting the challenge of poverty reduction.  In fact, the IF is the only vehicle available to the core
agencies and other stakeholders to coordinate work related to the objective of integrating the LDCs to
the world economy.  In a survey conducted in connection with the mandated review of the IF, all the
stakeholders indicated their support for the IF despite the fact that they had noted many weaknesses in
the implementation of the IF in the past.
It has been increasingly realized by all stakeholders that the IF could become an effective
mechanism for assisting the delivery of trade-rela ted technical assistance and capacity building only if
it is an integral part of the overall development strategy.  In fact, this was the principal
recommendation of the mandated review of the IF.  The IF had been outside the mainstream ofidentifying, implementing, evaluating and monitoring development strategy and performance.  As a
result, the implementation of the IF had been weak .  Mainstreaming is, at once, the means, process
and strategy of improving the IF and of laying down the basis for achieving its aims. There are now
instruments available to take a comprehensive approach to development strategy formulation,
implementation and monitoring of development performance through Poverty Reduction StrategyPapers (PRSP) coordinated by the World Bank and implemented through the Country Assistance
Strategies (CAS) and the United Nations Development Assistance Framework (UNDAF). The IF
supports the inclusion of trade policy elements in these instruments.  These instruments are country-
driven and are developed through participatory processes.  By folding the IF into the PRSP process as
agreed by the core agencies, the IF naturally beco mes an instrument that would take a comprehensive
approach to the articulation of trade policies.
The contribution of trade policies for higher levels of economic growth and poverty reduction
was well appreciated by the High Level Group that created the IF in 1997 
**************************.
There is now even greater evidence than before, that openness is good for growth and poverty
reduction††††††††††††††††††††††††††, even though there could be short-term costs to reforms for some
                                                     
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡ International Monetary Fund ( IMF), International Trade Center (ITC), United
Nations Conference on Trade and Development (UNCTAD), United Nations Development Programme
(UNDP), International Bank for Reconstruction and Development (World Bank) and World Trade Organization
(WTO).
§§§§§§§§§§§§§§§§§§§§§§§§§  Review of the Integrated Framework for Technical Assistance for Trade
Development of Least-Developed Countries, Report: WT/LDC/SWG/IF/1, 29 June 2000.
************************** WTO, High Level Meeting on Integrated Initiatives for the Least-Developed
Countries’ Trade Development, WT/LDC/HL/1/Rev 1, October 1997.
†††††††††††††††††††††††††† David Dollar and Aart Kraay, “ Growth is Good for the Poor”, March 2000
(draft); Jeffrey Frankel and David Roemer, “Does Trade Cause Growth” American Economic Review, 89(3),379-399;
Sebastian Edwards (1998), “Openness, Productivity and Growth: What do We Really Know, Economic
Journal 108 (March) 383-398; Anne O. Krueger, “Why Trade Liberalization is Good for Growth?”, Economic
Journal 108 (March), 1513-1522 ; Francisco Rodriguez and Dani Rodrik, (1999) “ Trade Policy and EconomicWT/LDC/SWG/IF/15
Page 136
segments of the poor.  Consequently, trade issues must play an important role in poverty reduction
strategies, where, in defining national development strategies, efforts will be made to provide safety
nets to the poor who may be adversely affected in the short run by trade reforms.  But it is also true
that most cases of poverty are also associated with isolation and lack of access to the world markets.
While the PRSP is to be the main instrument to address poverty reduction issues, at the present timethere is no guarantee that trade issues would be included given the process in which the PRSP are
prepared.
The present paper examines the core issues related to mainstreaming trade into overall
development strategy making.  It is limited in scope since it looks at policy relevance of
mainstreaming from the perspective of LDCs.  It does not include the challenges to the core agencies,
external donors and other stakeholders.  In addition, the issues identified and discussed in the paperare intended to provide a suggestive road map for c onsidering issues related to mainstreaming rather
than provide final answers.  These must come from wider discussions, from those that are planned for
the expert seminars on mainstreaming the IF.
Following this introduction, Section II examines companion policies to support trade policy
reforms.  Section III discusses mainstreaming trade issues within country development strategies.
Section IV looks at issues relating to the coordination of trade priority areas of actions into the
existing development vehicles such as the PRSP and the UNDAF.  Section V provides two national
experiences in addressing trade issues.  Section VI examines issues related to the building of a
domestic constituency for mainstreaming and Section VII discusses what could become the bestpractices in mainstreaming, drawing on the discussions in the earlier sections.
II. TRADE AND COMPANION POLICIES: MACROECONOMIC AND REGULATORY
POLICIES
The success of liberalizing trade to integrate economies into the world economy depends not
only on trade policies but also on a host of companion policies.  A trade liberalization attempt without
appropriate companion policies is unlikely to succeed.  Studies of trade liberalization done since the
1980s
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡, show that trade liberalization has failed in many instances due to the lack
of appropriate companion polices rather than due to the faulty design of trade policies themselves.  Of
course, trade policies can fail by themselves, if they are poorly designed, but the empirical evidence
available to date indicates that the absence of companion policies is the principal reason for a reversalof trade liberalization.  Companion policies include both macroeconomic policies as well as policies
that affect the allocation of resources among different sectors and markets.
Macroeconomic disequilibria as indicated by rising inflation, large fiscal and current account
deficits in the external account and overvalued exchange rates have been responsible for manyfailures of trade policy reforms.  In the meantime, poor regulatory frameworks inhibit the movement
of resources to activities and sectors made profitable by trade reforms.  Thus the lack of credibility of
macroeconomic policies and barriers to entry and exit could create problems for investment and
resource movements in line with trade reforms.
Exchange rate polices assume a crucial role in a trade liberalization.  This is because trade
liberalization could lead to a trade deficit since imports respond faster than exports to a change in
                                                                                                                                                                    
Growth: A Skeptic’s Guide to the Cr oss-National Evidence”, Center for Economic Policy Research Working
Papers, No: 2143;Alan Winters,  “Trade Libe ralization and Poverty,” February 2000 (draft).
‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡‡  Anne O. Krueger, (1984)  “Th e Problems of Liberalization” in A.C. Harberger
(Ed) World Economic Growth, International Center for Economic Growth, San Francisco; Michael Michaely,D. Papageorgiou and A.M. Choksi (1991), “Liberalizing Foreign Trade: Lessons of Experience in the
Developing World,”  Blackwells, Oxford.WT/LDC/SWG/IF/15
Page 137
relative prices.  Moreover, the situation prior to trade liberalization is usually one of an overvalued
exchange rate maintained with import restrictions, thus a liberalization which allows the allocation of
resources based on prices implies a change in a fundamental macroeconomic price such as the real
exchange rate.  Unless, the exchange rate system is  one of a flexible regime, a change in the exchange
rate is needed to restore equilibrium.  A continuation of an overvalued real exchange rate also makesthe exports of the liberalizing country non-competitive in which case the trade liberalization will not
lead to an increase in exports.  What would seem  to be a much-needed accompaniment to trade policy
reforms is a stable and competitive real exchange rate.  For this to be brought about stable
macroeconomic policies are a necessity.
Another companion policy that may be needed is fiscal reforms to ensure that there are new
sources of revenue as tariff revenues could fall with trade liberalization, which is by no meansinevitable.  The replacement of quantitative restri ctions (QRs) with tariffs, getting rid of tariff
exemptions, the depreciation of the exchange ra te and the reduction in smuggling would help to
maintain or even raise revenues.  Moreover, rising GDP growth with reduced distortions and
increased investment could raise revenues.  In some countries, especially among the LDCs where
government revenues are more dependent on tariff revenues than in other developing countries, newsources of revenue need to be found.  This implies fiscal reforms.  It is also true that a decline in
revenues may also improve resources allocation where tariffs have led to large wedges between
domestically produced and foreign goods and services.  Of course, public expenditures could be
reduced and better targeted than in the past, which would help to overcome any of the short-term
revenue problems that could arise.
Regulatory policies will influence the availability and the best use of existing facilities such
as transport, communications and port facilities.  Improper regulatory policies prevent the best use of
existing and scarce facilities much needed for the participation in the world economy. They must
support trade reforms in a number of ways.  The inefficient use of already insufficient road andcommunications networks imposes high costs on an economy, depriving the country of the ability to
compete well as the border barriers are reduced.  Thus policies that influence costs beyond the border
need to be put in place to obtain the best results from trade liberalization.  Otherwise, excess costs act
as non-trade barriers and prevent the improvement of resource allocation which is the main object of a
trade reform.
Labour and other market factor reforms must accompany trade reforms to ensure that the
resource reallocation attempted by the trade reform actually takes place.  Regulatory reforms that
ensure mobility of labour markets and capital markets enhance the resource allocation effects sought
by a trade liberalization.  Rigid labour markets or unavailability of working and long-term capital
would prevent the reallocation of resources into more competitive activities as well as investment in
line with new incentives.  The resulting inelasticity of supply prevents the full benefits of trade reform
from being realized.  Capacity-building to partic ipate in the world economy assumes a major role in
the support of trade reforms.
Mainstreaming becomes an important means of coordinating and integrating trade policies
with companion policies.  It allows policy makers and all the stakeholders to take a comprehensiveapproach to trade reform and to consider policy prerequisites for successful trade reforms in a single
framework.  Thus in the process of PRSP preparation, macroeconomic, regulatory and capacity
building policies would be considered in a single framework.  This would lead to proper prioritizing
and sequencing of all reforms.  Thus mainstreaming trade policies within overall development
strategies is imperative for the success of trade reforms.
III. MAINSTREAMING TRADE WITH CO UNTRY STRATEGIES: CONCEPTS OF
MAINSTREAMING, CORE ISSUES, APPROACHES TO MAINSTREAMING,
IMPLEMENTATION MECHANICS AND COSTS OF MAINSTREAMING:WT/LDC/SWG/IF/15
Page 138
Mainstreaming as a means, process and a strategy aims to link trade policies to the overall
development strategy of a country.  As the mandated review of the IF report has noted, IF processes in
the past have been largely outside the mainstream of development strategy formulation, resource use
and foreign assistance decision-making at the country level.  Consequently, the IF did not receive ahigh profile in the minds of many stakeholders, including those at the country level.  Furthermore,
since it was essentially an unfunded mandate, it was seen more as an add-on rather than an important
initiative to bring the LDCs to participate in the world economy by realizing the synergies to be
created by the coordination of the activities of the six core agencies in LDCs.  While it did help to
coordinate the work of these agencies, it did not lead to the realization of the full benefits that were
expected by the architects of the IF.  This happened because the IF was not in the mainstream of
development policy making.
The concept of mainstreaming in this context is  the integration of trade strategy into overall
development strategy.  This implies, in practice, that trade policies and facilitation and creation of
trade institutions are factored into the overall development strategy and resource use.  It is therefore, a
matter of not merely including trade issues in documents to satisfy a mandate, but actuallyconsidering what trade issues are, prioritizing them and including them in a country strategy.  The IF
review noted the sentiments of the LDC policy make rs who were surveyed for the review.  While they
completely endorsed the objectives of the IF, they felt that the IF was neither sufficiently demand
driven nor country owned and was unadapted to different country situations and incapable of being
implemented and monitored within a single framew ork.  By folding the IF into the PRSP process,
many, if not all, the objectives of the IF, could be realized.
Trade issues could form a part of the core elements in a PRSP on the basis that an existing
protectionist regime creates an obstacle to poverty reduction due to a host of reasons, namely: (a) that
it does not allow the use of labour intensive techniques since protection would have prevented acountry from exploiting its comparative advantage with a resource endowment of large pool of labour,
thus reducing the opportunities for employment to the poor (who have neither physical nor human
capital to raise their living standards); (b) a restricted import regime taxes exports activities  of the
country  that have a comparative advantage in  the production of particular products such as
agricultural exports.  This would  limit the income of the rural poor;  (c) the high protection induced
domestic prices of manufactures help to keep real income of the urban poor lower than the alternative
of having a more open trade regime in which prices cannot diverge greatly from world prices.
In the preparation of a PRSP, a country can define its trade objectives and targets such as to
increase the proportion of traded goods in national income, lower average tariff rate to a level more in
line with its competitors and reduce the variance in protection by moving towards a uniform tariff.  In
addition a PRSP can target a low coverage of quantitative restrictions compared to the prevailingcoverage, say to a low level such a one to two per cen t of all tariff lines.  The PRSP could articulate a
trade reform strategy with a proper sequencing of re forms to take into account appropriate companion
policies to give credibility to the reform process.
The rationale for folding the IF into the PRFP process is that a number of similar goals could
be shared.  The PRSP process is build on five principles: it is country-driven, comprehensive (by
definition it must include structural reforms that encompass trade reforms), it is meant to be focused
on the medium and long-term strategies, it must be result oriented and coordinated with partners.
These are indeed the principles that the LDCs and other stakeholders also expected from the IF as
found in the survey conducted in connection with the mandated review and in the interviews of themajor stakeholders.  Another principle that is implicit in the PRSP (but was not clarified in the IF)
was that the centre of action has to move from foreign capitals to country's domestic capitals and
more particularly to the Ministry responsible for coordinating development efforts and seeking
foreign assistance.  This means that the nerve centre must be at the Ministries of Development,WT/LDC/SWG/IF/15
Page 139
Finance or Planning rather than the Ministry of Trade or Commerce.  The mandated review of the IF
recommended that the IF also should move to th e main development policy implementing Ministry.
The core issues related to IF mainstreaming are the following:
(a) Incentives for mainstreaming:
The reason for mainstreaming the IF at the c ountry level is that the stakeholders will
have increased participation opportunities.  Thus the main stakeholders at the country
level, the central Ministry officials, Trade or Commerce Ministries and the private
sector agents can work together in formulating overall development strategies that
include trade-related policies and technical assistance.  The core agencies that have acountry presence can participate at ground level as can bilateral donors.  This will
create incentives for the country to include trade elements in the overall policy
framework.  By including trade policy issues in the PRSP and UNDAF - instruments
that influence assistance levels received by LDCs – countries may be induced into
integrating their economies within the world economy.  For example, the WorldBank’s level of country assistance would be based on the development strategies
defined in the PRSP.  Increased efforts by the LDCs to integrate into the world
economy would be rewarded by access to a higher level of assistance.
(b) Complementarity of IF and the PRSP:
One question that has been asked with respect to the recommendations made in the
mandated review for mainstreaming is why would the IF be needed if the activities
related to technical assistance are included in overall development strategies and
implemented centrally rather than at a trade ministry.  In other words, could the PRSP
not, in some ways, become a substitute for the IF since it should look at developmentstrategies overall.  However, the IF would be more of a complement than a substitute,
since it would help to ensure that the trade policies and related technical assistance
are included in the consideration of development strategies.  The IF has a well
recognized mandate to integrate LDCs into the world economy.  Mainstreaming
reconciles the two principles, one of a comprehensive approach to the formulation of
development policies while fulfilling of a special mandate to integrate these countries
to the world economy.  The most important aspect is that these two goals are highlycomplementary.  As the PRSP would be jointly assessed by the World Bank and the
IMF, their assistance and support programmes would be coordinated, thus allowing
trade strategy, balance of payments and exchange rate policies to be evaluated and
coordinated.
(c) Timing of the IF:
Given that the PRSP would be folded into the IF, the IF could follow the PRSP cycle,
which is generally considered as being every three years.  Since the PRSP process
was implemented only last year, it has been decided to prepare an intermediate PRSP.
The PRSP process provides for an annual review of country strategies.  Themonitoring of progress of the IF implementation would be automatically linked to the
PRSP cycle.  The WTO's Trade Policy Review Mechanism (TPRM) - which
examines in depth countries' trade policies - and the World Bank’s Economic and
Sector Work (ESW) could both prove useful aids in monitoring the progress of the IF
This would allow for continuity in the review of trade policy formulation, tradeinstitution building and trade facilitation.WT/LDC/SWG/IF/15
Page 140
(d) The cost of mainstreaming:
Mainstreaming will ultimately cut costs by reducing the double expenditure
associated with the past process whereby the Ministries of Trade and Commerce dealt
with the core agencies, bilateral donors and domestic stakeholders, as this would now
be carried out by one central Ministry.  The fixed costs of the PRSP would cover apart of the IF.  This would save the high costs of sending delegations to Geneva to
discuss IF issues and also the cost associated with a multi-phased IF processes that
existed in the past.  However, since trade issues will be included in the PRSP process,
there would be costs associated with hiring expertise, financing studies and
undertaking feasibility studies for trade facilitation.
(e) Financing of IF related activities:
The Integrated Framework Trust Fund (IFTF) can provide financial assistance to
mainstream the IF into the PRSP by financing the trade-related technical
assistance
§§§§§§§§§§§§§§§§§§§§§§§§§§ .  It could either be launched as a pilot scheme or a
scheme that could start with immediate effect.  It would finance assistance to prepare
trade policy aspects of a PRSP at the country level as well as studies that will enable
the country to participate more effectively in the multilateral trading system.  Thusfinancing would be available for such activities as the preparation of trade policy
studies, project preparation for both trade facilitation and institutional development.
The access to these funds can be provided to the LDCs and the core agencies to hire
the expertise needed for the purpose.
IV. COORDINATING THE INTEGRATION OF TRADE PRIORITY AREAS OF
ACTION INTO EXISTING DEVELOPMENT VEHICLES (PRSPS, CGS, UNDAF AND
UNDP ROUND TABLES)
The representatives of the core agencies at their July 6, 2000 meeting agreed that the
mainstreaming effort will be led and coordinated according to the principles of the ComprehensiveDevelopment Framework (CDF) with the participation of core agencies and other stakeholders based
on the work done in the Needs Assessments (NA) and subsequent work.  This would involve
formulating country specific integration strategies as a part of the mainstreaming process.  These
activities will feed into World Bank Consul tative Groups (CGs) and UNDP Round Table meetings
(RTs) where countries present their medium-term policy frameworks and financing needs, including
trade-related assistance for support by the donor community.
The integration of the IF into existing vehicles can be attempted by several approaches.  One
way to approach the mainstreaming process is by ma king priority lists in the NAs  that have been
already prepared for some forty countries and updating them  to take into account new developments
and approaches agreed upon at the July 6, 2000 meeting.  Another approach is to start afresh, since
many of the NAs that had been prepared neither reflected overall development strategies nor had apoverty focus.  But the results of both approaches need to be discussed with the society at large, given
the link of the IF to the PRSP.  One important way of  ensuring that trade issues are incorporated into
the PRSP process is to include a chapter in PRSP th at deals with the link between trade issues and
poverty reduction.  The content of the chapter would include an identification of the main constraints
on integration of the LDCs into the world economy due to policies, institutions and trade facilities,including market access issues and issues related to the assessment of trade related capacity creation.
                                                     
§§§§§§§§§§§§§§§§§§§§§§§§§§  Such a proposal has been made by a group of bilateral donors. See “Integrated
Framework- Proposal for a Pilot Scheme” (Draft 18/12/00)WT/LDC/SWG/IF/15
Page 141
There is a built-in coordination of existing development vehicles once the IF is folded into the
PRSP.  The PRSP vehicle itself is derived from the Comprehensive Development Framework (CDF),
that has an economy-wide and society–wide approa ch to economic development.  PRSPs are prepared
by a country and are based on CDF principles on their own volition.  A joint assessment is made by
the World Bank and the IMF after the PRSP is prepared. Depending on the strategies articulated bythe participatory processes in the PRSP, a CAS is prepared which reflects the country’s own strategies
and targets for policy and institutional change.  The CAS provides a resource envelope for the
country.  The resource envelope provided by the World Bank would  reflect the extent of policy
reform and the Government’s commitment to reach the targets for poverty reduction set out in the
PRSP.  CGs are the forums to discuss the strategies with donor participants.  Similarly, when the
UNDP is the lead actor in a country, a Round Table (RT) would be the forum to discuss trade-related
technical assistance.
Finally, a PRSP has a built-in evaluation and monitoring system and specific benchmarks for
monitoring safety nets to safeguard the well-being of some segments of the poor who may be
adversely affected by the reforms.  In fact, such an approach to trade policy making, would elicit
much support from all the stakeholders.
Issues relating to the Coordination and Integration of Priority Areas are the following:
(a) Prospects that trade issues would be included in a PRSP or UNDAF:
At present, there is no built-in system that trade issues would be included in PRSP
and the UNDAF.  For instance the three PRSPs completed to date:  Burkina-Faso,
Tanzania and Uganda have not addressed trade issues explicitly.  This is partly
because there is no built-in mechanism to coordinate the work of the core agencies
outside of the IF.  Folding the IF into the PRSP process is one important way of
coordinating the trade-related issues in the LDCs.  However, the PRSP process isnew, it was only initiated last year.  There has not been a systematic way to
incorporate trade issues into them.  Few other PRSPs, now under preparation could
include trade elements in them, but presumably not in a systematic way as would be
needed to realize the goals of the IF.  In addition,  there is a  built-in bias against
including trade issues that arise from the political economy factors (see Section 6
below).  This is why the incorporation of the IF into the PRSP is crucial to give the
opportunity for trade-related issues to be di scussed with society at large and included
in a development strategy.  The coordination of these efforts at country level should
lead to improved dissemination of the IF's objectives.
(b) Coordination of trade priorities:
One of the main weaknesses of the implementation of the IF in the past was that it
was not systematically incorporated into the formulation of overall developmentstrategies.  They were also not discussed and evaluated in main development forums
except in very few cases.  Consequently, proper coordination among the major
stakeholders was not attained.  The IF did however help to coordinate trade work
within the core agencies and as a result contributed to their efforts.  One way of
improving coordination of the main stakeholders of the IF is to include a specialsession in CGs and RTs on trade-related technical assistance issues.  Along with the
provision of including a chapter on trade-related issues in the PRSP, this approach
would reinforce the need to coordinate the work of a wider group of stakeholders,
whether they be country officials, bilateral donors or core agency officials.  As
discussed in Section (5) below this approach  of including the IF in the CG proved to
be successful in Uganda.WT/LDC/SWG/IF/15
Page 142
(c) Coordination through dissemination:
As proposed above (Section IV) IFTF can be used to finance strong dissemination
efforts among domestic stakeholders, demonstrating the  importance of trade issues
for growth and poverty reduction.  Such studies can, in addition, identify the
obstacles to a country increasing its exports due to protection in importing countries.This would help to disseminate trade issues beyond the CGs and RT forums.  These
studies could also help with the preparation of a country to have better access to
developed country markets, preparation for accession to the WTO and for
participation in a new round of multilateral trade negotiations to further promote the
interests of the LDCs.  These efforts could help to disseminate more widely the plight
of the LDCs and help them to bring to the attention of a wider audience the specific
constraints they face and how others can help them to overcome these constraintsthrough greater market access and assistance to develop improved programmes for
trade development and capacity building.
V. TWO NATIONAL EXPERIENCES IN MAINSTREAMING TRADE INTO
DEVELOPMENT AND POVERTY REDUCTION STRATEGIES
The two contrasting experiences in the implementation of the IF are Bangladesh and Uganda.
Uganda has already produced a PRSP while Bangladesh is in the process of doing one.  The
experiences discussed below pre-date the PRSP.  Nevertheless they  help to focus attention on the
issues of mainstreaming the IF at the national level.
In the Bangladesh case there was no mainstreaming.  The IF was implemented by the
Ministry of Commerce.  By contrast, in the Uganda case the IF was handled by the Ministry of
Tourism, Trade and Industry (MTTI) rather than by the Ministry of  Finance.  In Uganda the IF
process was “mainstreamed” in the sense that it was included in CG process from the start.  This was
due to the interest of some of the core agencies in  the field who took the lead to support the MTTI.  In
fact, of the five countries that had completed the IF process by April 2000, Uganda was the only
country, that was able to receive financial support for the IF.
However, even in the case of Uganda, the IF was not mainstreamed in the sense that it was
not implemented by a Ministry that was responsibl e for an overall development strategy formulation.
Consequently, it seems less of a continuous effort than one that would have produced a stronger link
to an overall development strategy.  The CG discussion of the IF appeared to be on a one time basis.Perhaps, that might be the reason why trade issues are not highlighted in the PRSP prepared by
Uganda.
In terms of the quality of the NAs and other documentation, those prepared by Bangladesh
were superior not only to that of Uganda but to the vast majority of the NAs that have been prepared.One reason was that in the case of Bangladesh funds were available from a World Bank Export
Diversification project to fund the preparation of the NA.  Moreover, Bangladesh had well-trained
personnel at the Centre for Policy Dialogue which prepared the NA.  On the other hand, in the case of
Uganda, the NA was done mostly by one dedicated individual who after preparing the NA went on to
another assignment.  Thus there was no continuity to the IF process in Uganda, as in many othercountries.  Certainly, individual projects have been undertaken under the auspices of the JITAP, but
they were not sufficiently linked to overall development strategies.  In the case of Bangladesh, as in
that of Uganda, the IF did raise the profile of trade policy issues, but there was less action at the
national level, since the IF remained outside the mainstream.  It did however, lead to an important
dialogue among some stakeholders, such as the di alogue between the private sector and the Ministry
of Commerce.  However, there was little to show in terms of tangible results of the IF, either inWT/LDC/SWG/IF/15
Page 143
changed policies or funding.  The process worked to some extent but the results did not appear to be
commensurate with the effort expended.
The factors that led to the mainstreaming IF in  including it in the CG in Uganda was due to
the government decision to do so, and the support it received from the donor community in thecountry.  It was, however, not the result of a systematic approach to including trade issues in an
overall development strategy, rather, it was due to taking a good step in the IF process. In the event,
trade issues did get an airing among all the stakeholders at the national level.  In Bangladesh, the
Ministry of Commerce implemented the IF without mu ch coordination with Ministry of Finance.  The
IF was neither mainstreamed nor included in the CG process.
While the IF evoked some interest in trade issues, they did not take a centre stage in the
Uganda PRSP.  In this sense, Uganda too, did not have a more sustained approach to including trade
issues in the articulation of overall development strategies.  This might  perhaps be due to the nature
of trade issues and the political economy of  trade policy making.
In terms of the costs involved in administering the IF, Uganda may have saved some
resources by including the IF in the CG process.  In the case of Bangladesh, however, there were two
separate efforts, namely the  CG process and the IF process.  One discussed overall development
strategies and resource availabilities while the other discussed trade policies and trade-related
technical assistance with little or no reference made to resources.  More resources could have been
saved by Bangladesh through including the discussion of the IF in the CG.  But this knowledge comesfrom hindsight and it does not  appear to have been considered by many national authorities who
could have included IF discussions in the CGs but chose not to do so, since they considered the two
forums as separate, as did few donors.
The two experiences reinforce the decision by the core agencies to mainstream the IF process,
and the folding of the IF into PRSP seems, in retrospect, a logical and appropriate step when these
two national experiences are examined.  In terms of bringing trade-related technical assistance to the
fore, in making it easy to coordinate the trade and the overall development strategy formulation and in
terms of  cost saving, these two experiences have  provided valuable lessons.
VI. BUILDING A DOMESTIC CONSTITUENCY FOR MAINSTREAMING
The PRSP and UNDAF processes that lead to  the articulation of country strategies for
economic development and poverty reduction have to be participatory processes.  This is the
consensus that has been reached among all the stakeholders in economic development.  The process
by implication must also apply to the formulation of trade policies, trade-related technical assistance,
institutional development and trade facilitation.  Consequently, it becomes necessary to re-doubleefforts to increase the awareness and national consciousness about trade issues in the LDCs
themselves.  One weakness in the past IF process was that it did not involve large constituencies in the
economy.  This can now be rectified through the PRSP process.
However, participation processes also entail bringing into the debate and conflict  with
powerful domestic constituencies that have a stake in the existing trade regime.  New constituencies
have to be developed that would support trade reforms.  As has been clearly recognized in the
academic literature, policy studies and policy formulation, there are powerful domestic constituencies
that oppose reforms.  A given regime of protection has constituencies that support that regime,
because it serves them by providing rents.  Equally, there are important gains to be realized from trade
reforms  that would bestow  economy wide benefits.  In the near term, the benefits of a trade reform
are not only uncertain but limited for each individual because they are spread among large segments
of the population.  On the other hand, powerful constituencies could lose rents they have enjoyed
through protection.  They would oppose reforms and lobby to prevent them from taking place.  ToWT/LDC/SWG/IF/15
Page 144
counterbalance this opposition, there needs to be groups that would benefit from trade reforms such as
present and potential exporters.  They would comprise the constituencies that support reforms.
Since some segments of the society could lose out during a trade reform, it is necessary to
provide targeted safety nets to tide over the short term costs such as higher consumer prices that mayresult from trade reforms.  There is no clear single approach to building of constituencies to support
trade reforms, since the impact of a trade liberali zation will differ according to the activity and the
sector-wise composition of foreign trade.  The effects of a trade reform need to be studied in different
country settings and safety nets designed to fit each situation.  For instance, if the poor produce
exportables, they will benefit from trade liberalization.  On the other hand, if they produce an
importable or have maintained their food consump tion by subsidies that may be eliminated in a
reform, they would lose out.  Special assistance measures are needed in the form of safety nets.  Thesewould help to build an important element of the dom estic constituency to support reforms.  However,
it is also important to consider that the short-term accommodations do not become long-term
entitlements, since that would defeat the purpose of a trade liberalization which is to improve resource
allocation in the first place.
Given the nature of the participatory process of the PRSP, there is the danger that trade issues
could be relegated to the background since the benefits of trade liberalization on the poor may neither
be perceived as such nor experienced immediately.  Direct methods of intervention through transfers,
improvements in access to health, education and nutrition are more closely associated with poverty
reduction in the public mind than with trade reforms, trade facilitation and institution building. Thelatter may also not bring visible and immediate bene fits.  Hence a special effort is needed to build
domestic constituencies for mainstreaming by dissemination of the likely benefits of trade reforms
and building wide constituencies to counterbalance the narrow interest of those who are benefiting
from the existing regime of protection.  The main contribution of trade reforms arises from better
resource allocation and increased investment (including foreign investment as resources are allocatedto activities in which the country has a comparative advantage) in the tradable sectors over the
medium and the long term.  This fact needs to be disseminated in the LDCs and safety nets have to be
provided at the time of reforms.  They could be so designed to have sunset provisions, such that when
the benefits of reforms begin, the safety net can be withdrawn.  Arguably, this is not an easy task  It
needs careful analysis of poverty profiles and study  of the impact of reforms on different segments of
the population.
Domestic constituencies may need to be built up to overcome the classic problem of trade
reform.  Funding for these efforts can be provided by the IFTF.  There is little work done in LDCs at
present on the impact of overall reforms on the poor.  The PRSP process would create the incentives
for the stakeholders to help LDCs undertake these ef forts.  A special provision would be needed in the
IFTF window to undertake such studies.  They could be aimed at (a) raising public awareness on tradereforms, particularly on their long-term benefits in  relation to short-term costs (b) identifying the
segments of the poor who may be adversely effected in some instances (c) designing ways of
targeting assistance to them through safety nets  during a trade reform (d) examining the best forms of
providing adjustment assistance and safety nets in a specific country setting. (e) analysing the issues
arising from  poverty as a result of isolation and lack of access to world markets.
The leadership to mount these efforts has to come from the key Ministry that is responsible
for the preparation of the PRSP.  However, as discussed above, the Trade or Commerce Ministry can
provide necessary support for this work with the help of core agencies.  In the preparation of the IF in
the past, many countries had gone beyond government agencies to undertake analysis of trade-relatedissues.  They had also consulted widely with private sector groups, some of whom in the export
sectors would be powerful allies for reform.  The import substitution industries could also help, if they
see that input prices could be lower due to a reduc tion in trade barriers and that they could compete
with imports on an equal footing with incentives created to realize greater efficiencies.WT/LDC/SWG/IF/15
Page 145
VII. BEST PRACTICES IN MAINSTREAMING
The above sections have identified various implications of mainstreaming the IF and folding
it into the PRSP process.  This would be done by including a chapter on trade issues in the PRSP and
by having a special session in the CG or RT on trade policy issues in general and on the IF in
particular.  Since country circumstances differ, there cannot be a single formulaic approach to best
practice - what works in one country may not work in another.  This is also the spirit of the PRSP
preparation process, as articulated by the World Bank.  Insofar as the IF is concerned, much depends
on the trade leadership at the country level and the understanding of the trade issues by a wider
audience.  Funds available under the IFTF can be used to develop consensus via studies and seminars
to disseminate the link between trade reforms and poverty alleviation.
Some common elements of best practice can be identified that could apply to different
country circumstances.
First, by folding the IF into the PRSP, the IF is  put into the same practices as the PRSP.  This
implies that the IF like the PRSP is country-driven, w ith broad participation of  elected bodies, civil
society and development partners.  The IF should reflect the special circumstances of the country’s
trade-related technical assistance needs.  This can be best defined by starting with a prioritization of
the NA elements or starting afresh, if in the judgment of the lead Ministry the NA that had been
prepared in the past was not sufficiently focused or  prioritized to lead to a meaningful programme of
action.
Second, given the new and participatory processes that are to be put into effect, it is crucial to
have a good dissemination of trade  issues based on analytical work that traces the relationship of
trade to poverty reduction.  The analytical work needs to be presented to public forums in a mannerthat is easily understood, so that all the stakeholders would be able to appreciate the short and long
run effects of trade reforms, the effects on different sectors and segments of the population, especially
on the poor.  Such an “educational” process is necessary because the IF needs to build domestic
constituencies that counterbalance the inherent inertia present in a protectionist trade regime.  The
political economy aspect of trade reforms demand that this effort is, presently needed more than ever
before, given the likely bias in the public mind that poverty reduction is more concerned with public
transfers and the development of specific sector such as health and education, rather than with tradereforms.  The method transfers to help the poor, is certainly necessary but it cannot improve resource
allocation, lead to higher growth and poverty reduction over the long term.  The indirect methods such
as improving the policy environment need emphasis to win support for trade reforms.
Third, the ITTF can be used to finance studies, to  prepare  feasibility studies for projects to
support trade facilitation, institutional development including customs reforms and similar activities.
These funds could be made available to the countr ies in terms of two windows.  A general fund to
support all activities associated with mainstreaming as the preparation of studies and dissemination.
A second window could be set up to finance identifi able programmes within the IF such as training
for specific activities such as customs administra tions or to prepare projects to improve trade
facilitation.
Fourth,  trade policy issues could be included in the PRSP as a chapter, which could be called
the Trade Integration Strategy Chapter where trade issues are examined in general the IF related
capacity building are addressed in particular.  The trade chapter in the PRSP could analyse the linkbetween trade and poverty reduction, the likely impact of trade reforms on different sectors and
segments of society, constraints to trade development including market access and capacity
constraints on trade development including institutional, manpower and physical constraints such asWT/LDC/SWG/IF/15
Page 146
transport, telecommunications and port facilities.  The chapter and related issues could be discussed in
a special session of the CG or the RT to disseminate the issues to all the stakeholders.
Fifth, along with the PRSP the issues identifi ed in the chapter could be monitored and
evaluated on  a regular basis.  As currently planned, PRSP related issues will be evaluated in CASsand in some cases updated in an annual basis.  Progress achieved can be monitored and evaluated and
discussed at the IAWG and submitted to the IF Steering Committee which represents all the
stakeholders.  This feedback could help to keep IF related objectives on track.
Finally, it would be necessary to create incentives for closer coordination of the activities
related to the IF at the country level.  This woul d mean closer coordination between the lead Ministry
which would implement the PRSP and the Ministry of Trade or Commerce.  The Trade Ministry musthave access to the IFTF and procedures need to be developed in concurrence with the lead Ministry to
access these funds and hire expertise including those outside the core agencies.  It would be the joint
responsibility of the relevant Ministries to prepare the PRSP with a trade component, present trade
issues in CG and RT forums, have access to funds to undertake feasibility studies and articulate
national strategies for trade and trade-related technical assistance and monitor them at the countrylevel.WT/LDC/SWG/IF/15
Page 147
References
Dollar, David, and Aart Kraay, “Growth is Good for the Poor”, March 2000 (draft).
Edwards, Sebastian, “Openness, Productivity  and Growth: What do We Really Know,” Economic
Journal, 108, March 1998, 383-398.
Frankel, Jeffrey and David Roem er, “Does Trade Cause Growth,” American Economic Review , 89(3),
379-399.
“Integrated Framework- Proposal for a Pilot Scheme” (Draft 18/12/00).
Krueger, Anne O.,  “The Problems of Liberalization” in A.C. Harberger (Ed) World Economic
Growth, International Center for Ec onomic Growth, San Francisco, 1984.
---.  “Why Trade Liberalization is Good for Growth?”, Economic Journal,  108, March, 1513-1522.
Michaely Michael, D. Papageorgiou, and A.M. Choksi, “Liberalizing Foreign Trade: Lessons of
Experience in the Developing World,”  Blackwells, Oxford, 1991.
Review of the Integrated Framework for Technical Assistance for Trade Development of
Least-Developed Countries, Report: WT/LDC/SWG/IF/1, 29 June 2000.
Rodriguez, Francisco, and Dani Rodrik, “Trade Policy and Economic Growth: A Skeptic’s Guide to
the Cross-National Evidence”, Center for Economic Policy Research Working Papers, No: 2143,
1999.
Winters, Alan,  “Trade Liberalization and Poverty,” February 2000 (draft).WTO, High Level Meeting on Integrated Initiatives for the Least-Developed Countries’ Trade
Development, WT/LDC/Hl 1/rev 1, October 1997.WT/LDC/SWG/IF/15
Page 148
BACKGROUND PAPERS
APEC Strategy, Capacity Building in APEC Related to the Implementation of WTO Agreements:
The Strategic Plan and Final Report, By the Government of Japan
Eliminating World Poverty:  Making Globalization Work for the Poor, White Paper on International
Development By the Government of the United Kingdom (DIFID)
__________