RESTRICTEDWORLD TRADE
ORGANIZATIONWT/LDC/SWG/IF/3
19 July 2000
(00-2987)
Sub-Committee on Least-Developed Countries
INTEGRATED FRAMEWORK FOR TRADE-RELATED ASSISTANCE
TO LEAST-DEVELOPED COUNTRIES
Report of the 20th Meeting of the Inter Agency Working Group,
New York, 21-22 June 2000
Chair:  Mr. Chiedu Osakwe (WTO)
1. The 20th Meeting of the Inter-Agency Working Group (IAWG) was held at the UNDP Offices
in New York, 21-22 July 2000.  The circulated provisional agenda (see Annex 1) was revised andadopted.  In the revisions, it was agreed that items (b) and (c) were to be discussed at the next IAWG
meeting.  It was also agreed to include, as item (d), Progress report of the IF to be submitted to the
Preparatory Committee for the Third UN Confer ence on the Least-Developed Countries (LDC -III).
I. MANDATED REVIEW OF THE INTEGRATED FRAMEWORK: INTRODUCTION
AND CONSIDERATION OF DRAFT
A. D
ISCUSSION ON THE REPORT OF THE CONSULTANTS ON THE INTEGRATED FRAMEWORK
2. The Report of the Integrated Framework for Technical Assistance for Trade Development of
Least Developed Countries was presented by the review team led by Mr. Sarath Rajapathirana.  The
presentation included the background to the IF review, the main issues and conclusions, and the
report's recommendations for the improvement of the IF.
3. Following the presentation, representatives of the IAWG made observations, expressed
Agency views and positions, sought clarification on specific issues and posed several questions.
(a) The Report was welcomed as an important input into the review process.  It was felt
that the Report had broadly captured the shortcomings of the IF.
(b) The recommendation on the need to inte grate trade into existing development
architecture was considered as one of the most important for the improvement of the
IF.  This recommendation responded to the criticism that the IF was all project and nopolicy and that IF activities had not been synchronized with existing development
architecture and activities.
(c) Clarification was requested on the recommendation for the establishment of an IF
Trust Fund.  Clarification was also sought on the methodology used by the review
team in conducting the review, includin g the interpretation of replies to the
questionnaires.
(d) Some questioned the distinction, in the Report, between trade-related technical
assistance addressing implementation issues, on the one hand, and infrastructure-type
(brick and mortar) trade-related technical assistance, on the other.  They consideredWT/LDC/SWG/IF/3
Page 2
that infrastructure development, trade support-type technical assistance were integral
elements of the original IF objectives.
(e) The observation was made that the recommendation that the IF should be more
"demand-driven" by LDCs did not take into account the fact that the lack of capacity
by LDCs did not to allow them to own the IF process and often required interventionby the agencies.
(f) The view was expressed that the Report had failed to mention and address the lack of
commitments by the core agencies as one of the major problems associated with the
weak functioning of the IF.
4. Mr. Rajapathirana responded to the issues and questions that had been raised.  First,
mainstreaming trade into the formulation of a c ountry's development strategy would assist LDCs in
giving effect to the principles of "demand-driven" and "ownership" of the IF.  The fact was that,currently, LDCs could neither drive the IF nor own it because they lacked the resources for doing so.
Mainstreaming would assist in installing trade policy (and reform) elements to the IF, which currently
did not accord equal emphasis to trade promotion as to import liberalisation.  Mainstreaming would
assist LDCs to realise that trade reform was indeed  a vital instrument for integration into the world
economy.  Moreover, it would also allow trade-related infrastructure projects to be financed throughthe World Bank Consultative Group (CG) process.  He stressed that the core Agencies had, up until
now, minimal incentives or commitments to coordinate their activities.  Absence of resources had also
not made meaningful the application of the principles of "demand-driven" and "ownership" of the IF
process by LDCs.  He underscored the Report's r ecommendation that the IF should not be continued
as an unfunded mandate, unless indispensable resource were made available through theestablishment of a trust fund.
5. Responding to criticisms by some, Representatives of the IAWG concluded that the Report
had been independently written.  They agreed that factual corrections would be made to reflect the
current status of the IF and that an addendum would be issued to the Report.  They also agreed that
the Group would draw no conclusions from the Report, however, the recommendations contained inthe Report would be considered as inputs to the IF review exercise by the six core agencies.  Finally,
they expressed their gratitude to the review team for its work and also to the World Bank which had
extended its resources for the independent review.
B. T
HE DISCUSSION OF THE MANDATED REVIEW BY THE SIX CORE AGENCY REPRESENTATIVES
6. The IAWG agreed to proceed with the IF  review process, under three themes: i)
mainstreaming of the IF; ii) funding; and iii) structure.
(a) Mainstreaming
7. Representatives unanimously agreed that it was indispensable to mainstream trade into LDC's
overall development strategy, as expressed in their Poverty Reduction Strategy Papers (PSRPs).
While it was recognised that the idea of mainstreaming was not new (for instance, IF Round Tables in
Tanzania and Uganda had been held in conjunction with the World Bank CG meetings), there was an
urgent need to make the mainstreaming process more rational, effective, and as part of an agreedprocess.  Mainstreaming was also identified as an important mechanism to bring all development
stakeholders together, agencies, donors and LDCs (including trade ministries together with finance,
development and planning ministries with the private sector).
8. The representatives stated that the mainstreaming process could take place in two stages: first,
at the formulation of a country's integration strategy within the framework of the PRSPs; and second,WT/LDC/SWG/IF/3
Page 3
at the operational stage, where the country's development strategy (and medium-term policy
frameworks) as expressed in the PRSP and its financing requirements were presented at the CG or
UNDP Round Table meetings.
Formulation of a country's integration strategy in PRSPs
9. The representative of the World Bank clarified that a PRSP was a country document, not a
Bank document, and often required a long time for preparation.  A chapter on trade, with a section on
the IF, was being developed as part of the PRSP Sourcebook, which would serve as guidance for the
preparation of a PRSP.  The Trade chapter would identify the trade instruments used in the country
integration strategy and also provided a methodology for assessing the impact of trade reform.  In
formulating an integration strategy, it was recognised that a customised analysis of the constraints
faced by the LDC in integrating into the world economy was required.  The trade policy analysis
would therefore include not only traditional trade policy instruments like tariffs, but also supply-sideconstraints including ports, transportation, customs, telecommunications, red-tape in the bureaucracy.
The Bank representative stated that the formulati on of an integration strategy was likely to involve
several reports and studies assessing various aspects of integration, which would then be transformed
into a country-specific integration strategy paper.
10. The participants recognized the World Bank's central role in the PRSP exercise since its field
presence was indispensable for the formulation of a customised integration strategy.  It was suggested
that the role of the IF at the strategy formulation stage was to animate, coordinate and finance the
strategy.  The IF could bring all stakeholders (various players in LDCs, donors and agencies) together
and ensure a dynamic interplay among them.  In doing so, the existing Needs Assessments could be
refined and then be incorporated, as appropriate, in the country's integration strategy.  In thediscussions, the Group recognized that an up-front fund was required to finance the strategy
formulation.
11. For LDCs not covered by PRSPs, it was suggest ed that other development frameworks such
as the Comprehensive Development Framework (CDF) or the United Nations Development
Assistance Framework (UNDAF ) could be used as a basis for a country's integration strategy.
Operational stage at the CGs/Round Tables
12. IAWG representatives considered that one rationale for mainstreaming was to generate more
resources for trade-related technical assistance at the CG/Round Table meetings, where an LDC's
appeal for resource requirements on development priories would be met by donors' financial
commitments.  By incorporating trade into the PRSP process, trade-related technical assistance and
other trade-related projects, including infrastructure-related projects, could be presented in the
CG/Round Table meetings.  It was suggested that a trade panel (or a panel on trade and development)could be organised, in parallel with other sectoral panels, at the CG/Round Table meetings, so that
trade-related projects would receive as much attention as other development priorities.
13. Some suggested that since the CG/Round Table process was sometime politically driven,
there was a need for automaticity in the process to ensure that trade-related technical assistance was
not a hostage to the political process.  Other suggested that an alternative forum had to be madeavailable in the absence of CGs/Round Tables, such as in cases of emergency or war in an LDC.  In
such cases, the agencies would have to make sure  that trade-related technical assistance needs were
met.WT/LDC/SWG/IF/3
Page 4
Advocacy
14. The participants emphasised that the IF could play an important advocacy role in all stages of
the mainstreaming process.  It was acknowledged that trade liberalisation and reform were often
painful processes.  Furthermore, trade policy did not naturally form an integral part of an LDC's
development strategy.  The fact that LDC governments and the donor community often had nopolitical incentives to pursue trade reform would therefore justify intervention by the global
community and its Agencies, such as through the IF.  In the preparation of a PRSP, the role of the IF
was to make sure that an integration strategy was an indispensable part of LDC's  poverty reduction
strategy process .
15. It was also recognized that the advocacy role by the IF was important at the operational stage.
The establishment of a trade panel would ensure that trade-related technical assistance and projects
had an opportunity to be presented at the CG/Round Table meetings, which were usually organised bythe minister of finance/economic planning and ex cluded the participation of minister of trade.
Involvement of the agencies
16. The IAWG representatives stressed the importance of participation by all the core agencies in
the mainstreaming process.  While the PRSP exercise was led by the World Bank, they felt that there
was a need to develop a mechanism to ensure the in volvement of all agencies, in particular, through
the IAWG where the World Bank would report progress in the mainstreaming process.  It was
recognised that each agency was equipped with part icular skills and distinct competence to contribute
to the PRSP process.  Some suggested that the participation of all agencies would help avert the risk
of conditionalities that could be imposed if mainstreaming was driven by one Agency.
17. At the operational stage, the CG/Round Table meetings currently only involved the
participation of the World Bank, IMF and UNDP (on behalf of all UN agencies), but not that of the
other agencies.  It was suggested that a trade pa nel, organised back-to-back to the CG/Round Table
meetings could ensure the involvement of all agencies.
(b) Funding
18. The IAWG unanimously agreed that if no resource was made available, the IF should not be
maintained by the core agencies.  The proposal for the establishment of an IF trust fund (IFTF) was
unanimously supported.  They considered that donor commitment and resources were indispensable
for the improved functioning of the IF.
19. Representatives suggested activities that could be financed through the IFTF.  These would
include: (i) the formulation of country-specific integration strategies, (ii) programme development
(which would include IF advocacy, monitoring the IF implementation from the CG process), (iii)
programmes/projects activities and the organisation of roundtables in LDCs which were not coveredby the PRSPs, or CGs/UNDP Round Tables, (iv) regional programmes, which did not fall within the
scope of the CG/Round Table process, (v) administrative process costs associated with the IF; (vi)
trade-related technical assistance, including those related to WTO compliance, trade support services,
and support for negotiations.
20. It was emphasised that the access to the IFTF was particularly important for those countries
which did not have PRSPs or CGs/Round Tables due to political or other reasons.  Moreover,
financing of trade-related technical assistance and capacity building, such as WTO compliance, trade
support services and support for trade negotiations , should not be subject to the PRSP or CG/Round
Table process.WT/LDC/SWG/IF/3
Page 5
21. Some representatives wondered whether the IFTF could finance the participation of Agency
staff in the coordinating body or the IF secretariat, such as through staff secondment from the core
agencies.  However, the majority of participants agreed that each agency should self-finance its
participation in the IF, in particular, the coordinating body.  It was echoed that each agency was
responsible for allocating or re-allocating its resources for participation in the IF.
22. On the allocation of resources from the proposed IFTF, it was agreed that the IAWG would
work out the criteria for the operation of the Fund and disbursements from it, at a later date.
23. Two possible options for the proposed IFTF were set-out, one for US$20 million and the
other for US$50 million over three years (2001-2003) .  The proposal is attached as Annex II.
(c) Governance and Management of the IF
24. Governance and Management issues surrounding the operation of the IF were considered.
Participants recognised that one of the problems which had impaired the functioning of the of the IFwas absence of a clear delineation of responsibilities and the absence of a buy-in by all stakeholders.
Governance and management of the IF needed to be enhanced and improved.  It was proposed that
such improvements could be effected at two levels, namely, policy oversight and
administrative/coordinating levels.  However, there was understanding among the participants that a
new governance structure had to be lean, not add to existing bureaucracy, and should make best use ofthe existing structure.
25. Some representatives expressed doubt as to the capacity for leadership of the IF by the WTO,
as suggested by the Report of the review team. While the WTO had the advantage of having strong
political leadership which was committed to the IF, it lacked operational capacity for providing trade-
related technical assistance and its role was usually limited to the areas of WTO compliance andimplementation, and information dissemination on the multilateral trading system.
(i) Oversight
26. The UNDP proposed the establishment of an oversight body, which could be referred to either
as a Management Board, Steering Committee, Co nsultative Group, or Advisory Board.  This
mechanism would represent a broad group of IF stakeholders.  There was support for this suggestionon the grounds that such a body would enhance transparency and accountability of the IF and would
provide a forum where problems arising from the IF could be quickly recognised and solutions be
provided.  It was also suggested that the existence of an effective oversight body would reduce the
necessity of having a leadership or centralised coordinator among the core agencies.
27. Some representatives expressed concerns that the establishment of the oversight body could
be perceived as over-bureaucratisation of the IF.  However, it was understood that the proposed
oversight body would simply expand the current existing body of the Heads of Agencies to includeother stakeholders of the IF, namely, donors an d LDCs.  It would meet periodically.  The
representation of donors and LDCs could be made on a rotating basis.  The proposal for the inclusion
of the private sector and civil society in the oversight body received little support among the
participants.
28. The IAWG agreed to work out details of the structure and the function of the oversight body
at a later date.WT/LDC/SWG/IF/3
Page 6
(ii) Administration and coordination
29. The IAWG considered the two options for an ad ministrative and coordinating body for the IF.
First, the creation of an independent secretariat, comprising staff seconded from the core agencies.
Second, using the WTO Secretariat.  In this regard, the WTO would be responsible for administrative
coordination, with the current AU being folded into the WTO Secretariat, and with secondment ofstaffs made available by the other agencies to the WTO Secretariat.  In considering the two options,
the best use of the existing structure, rather than the creation of a new body, was stressed.  Therefore,
the representatives supported that as the WTO w ould continue to serve as Chair of the IAWG,
1 the
organisation would be responsible for the coordination function of the IF, by absorbing the functions
of the Administrative Unit currently located in the ITC.
30. There was an exchange of views on the possible functions of the WTO Secretariat.  Functions
suggested included: (i) servicing the IAWG and preparation of documentation; (ii) ensuringinformation flow among the six agencies, donors and LDCs; (iii) promotion of the IF (iv) providing
periodic reports to the proposed oversight body; (v) overseeing the allocation of resources in the
IFTF, (vi) monitoring and implementation of acti vities resulting from the PRSP and CG/Round Table
process; (v) support for programme design; (vi) resource mobilisation.
2  On (v) and (vi), it was
suggested that project design would be better provided by agencies with field presence and thatresource mobilisation would be better taken up by the proposed oversight body, where donors were
represented.  It was emphasised that the role of the WTO Secretariat had to be essentially a
coordinating role.
31. The participants recognised that, in addition to the coordinating function, the IAWG had to be
equipped with an administrative capacity to intervene in the PRSP process, making sure that trade wasmainstreamed into LDC's development strategies.  This function of the IAWG was defined as a
"gateway" function by the IAWG to the PRSP process,  to be led and coordinated by the World Bank.
The role of IAWG was considered particularly significant in those LDCs not covered by the PRSPs
process.  In these cases, the IAWG would be exp ected to initiate the formulation of integration
strategies.  It was also suggested that until the Sourcebook for PRSPs was fully developed, the IAWGmight have to play a more active role at the strategy formulation stage.  In this regard, it was stressed
that the IAWG needed to have access to the proposed IFTF to launch the PRSP or alternative strategy
formulation process.
32. In order to maintain coherence in inter-agen cy coordination in the mainstreaming process,
representatives supported the secondment from agencies to the WTO Secretariat, on a voluntary basis.
They agreed that this arrangement would be flexible.  Staff could either be seconded directly to the
WTO Secretariat on a full or part time basis, or be designated specifically for IF matters, as a staffmember, in the Geneva representative office of an agency.  It was understood that there should be two
or three persons in total seconded to the WTO Secretariat at any time.  The World Bank and UNDP
expressed their willingness to begin with the secondment of staff to the WTO Secretariat.
33. The IAWG agreed to draw the terms of reference for the IAWG, as well as for the WTO
Secretariat as coordinator, at a later date.
(iii) Administration  of the IFTF
                                                     
1 The representatives recognized that the IAWG requ ired continuity in its representation, and agreed
that, to the extent possible, the same people should attend meetings of the IAWG.
2 The Administrative Unit, currently located in the ITC, reported that its function included (i)
promotion of the IF, (ii) information dissemination, incl uding maintenance of the IF website, (iii) support for the
preparation of Round Tables, including documentation, (iv) assistance in program designs.  In addition, it stated
that the Administrative Unit had recently played a more pro-active role, including the initiative to obtain
resource for the French-speaking LDCs.WT/LDC/SWG/IF/3
Page 7
34. The representatives agreed that the criteria for the disbursement of funds under the proposed
IFTF would be decided by the IAWG at a later date .  However, they considered that the fund should
be administered by an agency or agencies with substantial capacity and experience with fund
management.  They considered the following three options: (i) the administration by the World Bank,
(ii) by the UNDP, and (iii) jointly by the two institutions.  Since it was thought to be more effectivefor one agency to take the responsibility, it was agreed that UNDP would administer the IFTF on
behalf of the agencies, on terms to be agreed.
(d) Other issues
35. The representative of the ITC gave a brief description of the JITAP which was jointly
managed by the ITC, UNCTAD and WTO and was providing trade-related technical assistance to 8
African countries (4 of which were LDCs and 4 non- LDCs).  The IAWG agreed to make use of the
existing JITAP activities that could be incorporated  into the IF as far as its operations in the LDCs
were concerned.
36. Regarding the question of enlargement of the IF to other developing countries, the IAWG
agreed that the IF should be limited to the LDCs ' constituency, at this time, and the matter of
enlargement should be re-considered when the new IF structure was found to be working.  Some
suggested that the categorisation of LDCs was artificial and somewhat political, and enlargementcould be considered on a case-by-case.
37. Regarding the question of enlargement of the core  agencies, the IAWG agreed to maintain the
status quo.  However, there was the understanding th at flexibility was necessary for collaborating with
other regional and multilateral agencies in the mainstreaming process through the PRSP.
C. O
THER BUSINESS
38. The UNCTAD representative requested the IAWG to provide inputs for the Preparatory
Committee for the Third United Nations Conference on the Least-Developed Countries (LDC-III)
where a progress report on the IF was to be submitted.  The IAWG agreed to submit any agreed
documentation that would issue from the meeting of Heads of Agencies Meeting on 6 July 2000.
39. The Group agreed to meet informally on 5 July 2000, in New York, ahead of the Heads of
Agencies meeting scheduled for 6 July 2000.WT/LDC/SWG/IF/3
Page 8
ANNEX 1
Provisional Agenda for the 20th Meeting of the IAWG
UNDP Offices, New York, 21-22 June 2000
40. The items proposed for the provisional agenda are as follows:
(a) Mandated Review of the Integrated Framework: introduction and consideration of
draft;
(b) The IF Round Table Process:
- evaluation of the RTs held since 19th Meeting;
- Launch workshops, informal pre-RTs held since 19th Meeting;
- Inventory of National focal points;
- lag between RTs and budgetary cycle of donor partners;
- status report on RT preparations, including the proposal for a Regional Round
Table for the Pacific (Kiribati, Samoa, Solomon Islands, Tuvalu andVanuatu);
(c) Implementation of Integrated Responses (WT/COMTD/IF/1-40); and,
(d) Any other business.WT/LDC/SWG/IF/3
Page 9
ANNEX 2
Proposal for an Integrated Framework Trust Fund (IFTF)
Option 1
The IFTF would involve an amount of US$20 million, to be disbursed over 3 years, to support the
mainstreaming of trade in 25 country poverty reduction strategies and to assist all LDCs to integrate
into the global economy and the multilateral trading system.
Proposed allocation:
1.  Preparatory analysis and development of a country-specific integration strategy to feed into the
PRSP:
25 countries at  US$275,000   =   US$6.875 million
Assumptions:
A team of 5 staff for 12 weeks (3 international experts, 2 local experts) - US$200,000Two workshops to consult with stakeholders (launch, and to discuss
 draft analysis/strategy) - US$45,000
Four weeks travel/subsistence for international consultants - US$30,0002.  Funding for project preparation--drafting of 3 to 5 concept papers responding to the priority areas
for action identified by the strategy, if the PRSP id entifies trade integration as an area for priority
action:
25 countries at $70,000 (4 concept proposals)  =  US$7 million
Assumptions:
One international expert per project, with national teams representing
stakeholders/beneficiaries - US$40,000
Three week missions, travel/subsistence per proposal development - US$10,000
 (Assisted/led by agencies with competence in specific areas if theseare identified as priorities)
Funding for activities of likely "project implementation units" if
project gets accepted by CG--overhead, office equipment, etc. - US$20,000
Note:  If trade does not emerge as a priority from the PRSP process, the project
preparation phase will not occur.
3.  Other capacity-building initiatives, including where LDCs are not covered by PRSPs or where CGs
/UNDP roundtables are not taking place (including in an appropriate time-frame), and where certain
capacity-building activities (such as those that are regionally-based) do not fall naturally into the
CG/UNDP roundtable process.WT/LDC/SWG/IF/3
Page 10
Examples include capacity-building for trade policy design and implementation; supporting regional
development of trade policy and infrastructure development for countries that are members of
regional integration agreements; training for trade negotiations and design of possible common
positions; staff exchanges and study tours for stakeholders and responsible agencies in LDCs - trade,finance, telecom, transport, industry, agriculture, health, chambers of commerce, etc.; identification of
regional approaches to WTO implementation (i.e., options for implementation of agreements that
respond to and take into account situations found in neighbouring or groups/types of LDCs).
48 countries; UDS$2 million per year  =  US$6 million .
Option 2
The IFTF would involve an amount of US$50 million, to be disbursed over 3 years.  US$20 million
would be used as indicated in Option 1 above.
The additional funding od US$30 million would be used to extend the strategy formulation and
project preparation work to include "near" LDCs, recognizing that the cutoff point at the margin
between LDCs and non-LDCs makes limited sense.  If the programme were extended to another 25
countries, this would require another US$$13 million .
Substantially more funds could productively be used for capacity-building programmes and training,
including study tours, scholarships and detachments (US$8 million).
More funding could also usefully be devoted to research and analysis of market access barriers
confronting LDC exports, including possible assessments of their WTO consistency; documentationof success stories (cases) and lessons; etc.  (US$2 million) .
Funding could also be devoted to the organization by  the IF agencies in cooperation with LDC partner
entities of an annual Trade and Development Forum (TDF) that brings together the trade-related
policy communities and the private sector, civil society and think tanks to foster interaction, learning,
get feedback on the IF program and strengthen networks. An annual TDF would cost at least
US$750,000; doing 3 will require US$2.25 million .
Funding could also be allocated to an internat ional "transparency" effort/mechanism that offers
analytical services to LDCs in areas where they do not have expertise and there is a market access
issue or a (potential) dispute--GMOs, labeling, product standard design issues, conformity assessment
procedures, etc. (US$5 million).
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