RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTDF/W/21/Rev.1
11 June 2003
(03-3011)
Working Group on Trade, Debt and Finance
DRAFT REPORT TO THE GENERAL COUNCIL
Revision
I. INTRODUCTION
1. The Working Group on Trade, Debt and Finance was established at the 4th Ministerial
Conference in Doha in November 2001, with the following mandate1:
"We agree to an examination, in a Working Group under the auspices of the General
Council, of the relationship between trade, debt and finance, and of any possible
recommendations on steps that might be taken within the mandate and competence of
the WTO to enhance the capacity of the multilateral trading system to contribute to a
durable solution to the problem of external indebtedness of developing and least-developed countries, and to strengthen the coherence of international trade and
financial policies, with a view to safeguarding the multilateral trading system from
the effects of financial and monetary instability.  The General Council shall report to
the Fifth Session of the Ministerial Conference on progress in the examination."
2. This report describes progress in the examination referred to in paragraph 36 of the Doha
Declaration. It is organized in two sections: Sect ion II provides a summary of the work undertaken by
the Working Group since the Ministerial Conference in Doha, and the process followed by the Group
pursuant to its mandate. Section III provides a summary of the themes that have drawn the particular
attention of the Working Group.
II. THE GROUP'S ACTIVITIES SINCE THE 4
TH MINISTERIAL CONFERENCE
A. SUMMARY
3. The Working Group has held six formal meetings, four in 2002 (15 April, 11-12 July,
30 September, and 17 December) and two in 2003 (28 March and 5 June), under the Chairmanship of
Ambassador Hernando José Gómez of Colombia.2
4. At its meeting on 11-12 July 2002, the Working Group adopted a three-part Work Plan
contained in WT/WGTDF/W/1/Rev.1 (Annex 1), to carry  out the examination of the issues laid down
in Paragraph 36. It was agreed that the Group w ould focus on the issue of “The Relationship between
Trade and Finance” at the July 2002 meeting, “The Relationship between Trade and Debt” at the
September meeting 2002, and “Towards Greater Coherence” at the December meeting.3 This three-
part Work Plan helped the Group proceed with its examination in a structured manner, without being
submerged with the complexities of the subject.  As indicated below, the Work Plan largely
contributed to highlight links between trade, debt and finance.
                                                     
1 Paragraph 36 of WT/MIN(01)/DEC/1.
2 Reports on these meetings can be found in WT/WGTDF/M/1, M/2, M/3, M/4, M/5, and M/6.
3 Since the fourth meeting of the Group in 2002 took place on 17 December 2002, that is several days
after the last General Council meeting of the year, the Annual Report of the Group reported on three out of its
four meetings held that year.WT/WGTDF/W/21/Rev.1
Page 2
5.  During its last meeting held in December 2002, the Group also agreed on its Work
Programme for 2003, which aimed at preparing its report to the General Council.  The meeting held
on 28 March 2003 aimed at evaluating and prioritising the principal themes that had emerged during
the substantive examination conducted in 2002;  at the last meeting of the Group, held on 5 June
2003, Members agreed on this report.
6. At the first meeting of the Working Group in 2002, it was agreed that all regular observer
organizations to the General Council would be granted observer status in the Working Group (the
FAO, IMF, ITC, OECD, UN, UNCTAD, WIPO and the World Bank).  In addition, it was agreed to
invite representatives of relevant intergovernmental organizations exercising responsibilities in areas
covered by the Work Programme to provide brief, factual presentations describing their work and
experience on the issues under examination.
7. A list of the working documents prepared for the Group is contained in Annex 2.
B. THE RELATIONSHIP BETWEEN TRADE AND FINANCE
8. At the Group's first meeting in April 2002, a representative of the IMF presented an overview
of the IMF's work on the reform of the financial architecture.  He noted that the major building blocks
of its work encompassed transparency and accountability, the strengthening of financial systems,
strengthened external vulnerability analysis, and standards and codes.
9. The Chairman noted the IMF’s view that participation in its financial sector assessment
programme, together with the design and implemen tation of prudential standards, could help WTO
Members assess their readiness to benefit from opening their financial services sectors.  The standards
initiative, pursued by the IMF and the World Bank, focuses on the development of internationally-
agreed standards and codes to promote strong institutional underpinnings for a stable internationalfinancial system.  The IMF had also stated that the adoption of standards and codes of good practice
contributed to the effective functioning of markets and created an enabling environment conducive to
investment and trade.
10. Some Members suggested that a number of issues be examined:  exchange rates and their
effect on competitiveness;  how the present financ ial architecture responds to the financial needs of
developing countries;  and how trade-financing facilities could be strengthened and made more
secure.
11. At the second meeting in July 2002, representatives of UNCTAD, the Asian Development
Bank, and the OECD made presentations based on their written submissions (cf. Annex 2). The
submissions, dealing respectively with the effects of financial instability and commodity price
volatility on trade, finance and development, trade policy and financial stability, and the lessons
learned from the financial crisis in terms of trade financing, led to many interventions by Members. Inthe ensuing discussion, Members raised issues such as exchange rate volatility and trade, the role of
trade and trade liberalization in periods of financial crisis, the sequencing of trade and financial policy
reform, difficulties in securing trade-financing, in particular in periods of deep financial crisis, fiscal
reform and tariff liberalization, and the use of trade restrictions for balance-of-payments purposes and
related WTO-provisions.
12. The Secretariat provided, upon request by Members, a literature survey on the relationship
between trade and finance (WT/WGTDF/W/9) and a comprehensive note on WTO provisions that
were relevant to the relationship between, trade and finance, and trade and debt (WT/WGTDF/W/3).WT/WGTDF/W/21/Rev.1
Page 3
13. In summing up the discussions on the relationship between trade and finance on his own
responsibility, the Chairman drew attention to the following themes and points that had been raised by
Members:
• The value of the WTO system in providing stability and economic security in periods
of financial crisis;
• the value of keeping markets open world-wide in periods of financial crisis, so as to
ensure that crisis-hit economies are able to continue to count on exports for foreign
exchange earnings and a source of income growth;
• the role of trade liberalization in resource allocation and the resilience of economies
to external shocks;
• the relationship between the exercise being carried out by the IMF and World Bank to
strengthen financial systems and the negotiations being carried out by the WTO onfinancial services;  and
• based on experience gained in Asia, the need to improve the stability and security of
sources of trade-financing, especially to help deal with periods of financial crisis.
14. Members understood that this was a summary of the discussion – not a checklist – and that it
could help focus the Working Group's work in light of the drafting of its report to the 5
th Ministerial
Conference.
C. THE RELATIONSHIP BETWEEN TRADE AND DEBT
15. At the Group's third meeting in September 2002, representatives of the United Nations
Economic Commission for Latin America and the Caribbean, the United Nations Economic
Commission for Africa, and the World Bank made presentations on the basis of their written
submissions (cf. Annex 2).  The presentations focused respectively on existing mechanisms to deal
with debt overhang, the role of trade policy and debt relief initiatives at the World Bank, and the
African experience with the links between trade and debt.
16. Also, the Group discussed a written submission from the European Community
(WT/WGTDF/W/8) containing a number of ideas on the process of the Working Group, proposals on
how to move to a more substantive phase of its work, and suggestions of concrete areas for improved
Coherence between the WTO and other international fora.
17. In the ensuing discussion, Members raised a variety of issues, inter alia  the importance of
export market access for indebted developing countries, the importance of avoiding distortions inexport markets by the use of subsidies, problems linked to deterioration in the terms of trade and
commodity price volatility, the linkages between domestic reforms and external liberalization, the
question of improving the supply-response of indebted countries, and the importance of alternative
sources of foreign finance for developing countries (such as FDI).
18. As background, the Secretariat provided a review of selected literature on the relationship
between trade and debt (WT/WGTDF/W/9).
19. In summing up the discussions on the relationship between trade and debt on his own
responsibility, the Chairman drew attention to the following themes as having been the focus of the
discussion:
• Foreign-access restrictions impede the ability of indebted countries to earn the foreign
exchange that they need to service their ex ternal debt and to avoid resort to further
unsustainable borrowing.  Relevant studies suggest that the gains that could be
derived from eliminating barriers on these countries’ exports far outweighed theWT/WGTDF/W/21/Rev.1
Page 4
annual flows they received of ODA and debt  relief – flows that the UN Conference
on Financing for Development in Monterrey had pledged to increase;
• A global, non-discriminatory reduction of trade barriers in the context of the current
WTO negotiations, especially in areas where distortions affect individual developing
Member country exports, could make a significant contribution to a durable solutionto the problem of external indebtedness of developing and least-developed countries;
• At the same time, individual indebted countries could improve the debt servicing
capacity of their economies by properly liberalizing their own trade regimes. Thiscould help boost their domestic growth, productivity and exports.  Careful
consideration needed to be given to the timing and sequencing of trade reform in this
context, as well as to the cost of adjustme nt involved in such liberalization and the
assistance needed to meet these costs;
• Trade policy reform in indebted countries needed to be supported by pro-growth
policies that could involve, inter alia , raising domestic private savings and
encouraging foreign direct investment;
• Further examination of the issue of the deterioration of the terms of trade was needed,
as it affected the capacity of countries, despite notable domestic reforms underway, to
service their debt and move away from commodity exports.
20. Members understood that this was a summary of the discussion – not a checklist – and that it
could help focus the Working Group's work in light of the drafting of its report to the 5
th Ministerial
Conference.
D. TOWARDS GREATER COHERENCE
21. At its fourth meeting in December 2002, the Group continued its educational process along
the lines begun at previous meetings, taking up Item III of the Work Programme - "Towards Greater
Coherence".
22. The Chairman reminded the Group that Paragraph 36 of the Doha Ministerial Declaration
included the aim "to strengthen the coherence of international trade and financial policies, with a view
to safeguarding the multilateral trading system from the effects of financial and monetary
instabilities".  He recalled that Coherence was part of an existing process in the WTO, which had
already generated significant activity deriving from the Marrakesh Declaration on the Contribution of
the World Trade Organization to Achieving Greater Coherence in Global Economic Policymaking.
23. Inter-agency activities involving the WTO that fell under this Declaration were reported to
Members on a regular basis, and were described in the Secretariat Note prepared for the meeting
(WT/WGTDF/W/17).  One issue for discussion therefore was the relationship between the Coherence
Mandate and the findings of the Working Group in its examination on the relationship between trade,
debt and finance.  In this connection, the Chairman highlighted some of the proposals put forward bythe Secretariat in its Note, particularly in Section III, on which Members were invited to reflect.  The
underlying issue of this agenda item was whether the examination by the Group could potentially lead
in part to an enhanced cooperation between the WTO, the IMF and the World Bank, and what kind of
ideas and messages the Group should send to Ministers in this area.
24. Following a fruitful discussion, the Chairman summarized the themes and potential areas of
interest that had been raised by Members on this agenda item, and noted that Members had focused
on:WT/WGTDF/W/21/Rev.1
Page 5
• The effects of financial and exchange rate instability on trade, drawing on the lessons to be
learned from the financial crises experienced by emerging economies in the 1990's;
• the examination and possible establishment of mechanisms and facilities to keep trade-finance
alive in periods of financial instability;
• the need for better integrating the work of international organizations in the areas of capacity-
building and trade infrastructure;  and
• the issues of the liberalization of financials services, on the one hand, and the efforts underway in
the international financial architecture, on the other hand, which had been raised several times, as
well as the links between WTO and other institutions on long-term, cross-border investments andcapital account liberalization.  Although these two topics were being debated in other fora, they
nevertheless had been part of the discussion of the Working Group on Trade, Debt and Finance,
which encompassed systemic issues of this kind.
25. Members understood that this was a summary of the discussion – not a checklist – and that it
could help focus the Working Group's work in light of the drafting of its report to the 5
th Ministerial
Conference.
III. PREPARATION OF THE REPORT TO THE GENERAL COUNCIL
A. PROCEDURE FOLLOWED
26. At the December 2002 meeting, the Group decided to focus its full attention in 2003 to the
preparation of the Report to be submitted to the General Council, in accordance with Paragraph 36 of
the Doha Ministerial Declaration.  Members decided to proceed in two steps, with each step involvingone meeting (on 28 March 2003, and 5 June 2003, respectively). The Chairman circulated the
illustrative list of 15 themes in a non-paper dated 9 December 2002 as a basis for examination by
Members (Annex 3).  It was understood that the list was open-ended, indicative and without prejudice
to Members' final positions. The objective was to boil down the number of themes to a maximum of 5
or 6, on which the Group would ultimat ely focus the final report. To guide the "selection" process, the
Chairman placed the 15 themes – some of which are related to the Coherence Mandate – in three
categories, the first category identifying those themes  identified as being within the exclusive remit of
the WTO, the second as involving the WTO and the IMF, with possible help from the World Bank
and regional development banks, and a third category that involved the WTO/IMF/World Bank.
B. S
ELECTION OF THEMES
27. Members were able to limit the list of themes in the following way, in line with the procedure
outlined above:
• Themes addressed in particular to the WTO
- Trade liberalization as source of growth . Trade liberalization is among several
factors that can improve the allocation of resources at national and international levels, and henceimprove the resilience to external shocks. As a factor in improving productivity and the allocation of
resources, trade liberalization can impact favorably on the debt servicing capacity of economies, as it
may result in increased sources of foreign exchanges such as net exports and foreign direct
investment.  Provided  that trade liberalization and reforms are sequenced and timed properly, taking
into account the special needs of developing countries, they could also reduce adjustment costs andenhance the ability of these developing countries to reap benefits from them.
- WTO rules and financial stability.  The WTO system is playing an important role in
providing economic stability and security, in particular in periods of economic or financial crisis.  The
"shock absorbing" nature of the system was tested during the emerging markets' financial crises in theWT/WGTDF/W/21/Rev.1
Page 6
late 1990s.  The existence of a strong rules-based multilateral trading system renders recourse to
protectionism more difficult and helps keep markets open, so as to ensure that crisis-hit economies are
able to continue counting on exports as one source of foreign exchange and income growth.  Some
crisis-hit countries have noted that self-restraint from trading partners in the use of contingent
protection was of great help in overcoming the crisis, and suggested that this be examined further inthe appropriate fora of the WTO.
- The importance of market access and the reduction of other trade barriers in the
Doha Development Agenda's negotiations . Non-discriminatory substantial reduction of trade
barriers by WTO Members  in the context of current WTO negotiations, under the Doha
Development Agenda, especially in areas where Members' barriers affect products of export interest
to developing countries, can be a valuable contribution that the WTO can make, within its remit, toimproving their opportunities for growth, and to ov ercoming the problem of external indebtedness of
developing countries by increasing their ability to earn the foreign exchange they need. Relevant
studies suggest that the gains that can be derived from eliminating barriers on these countries' exports
outweigh and complement the annual resource flows they receive of ODA and debt relief – flows that
the Monterrey Consensus has pledged to increase.
• Themes addressed in particular to the WTO and the IMF (with possible help from partners such as
the World Bank and regional development banks)
- Trade and financial markets .  In the 1990s, deep financial crises in part affected
trade flows in a number of WTO Members.  Foll owing a first examination, and while recognizing
current efforts to strengthen the financial archite cture, Members wish to improve their understanding
of the trade and trade policy implications of a perceived greater volatility of financial markets and
exchange rates world-wide. Other issues involving financial services and other forms of investment
related to trade, that have a bearing on on-going work of the WTO and other relevant international
organizations, should remain under review in the WTO.
- Trade-financing . Based mainly on experience gained in Asia and elsewhere, there is
a need to improve the stability and security of sources of trade-financing, especially to help deal with
periods of financial crisis.  Further efforts are needed by countries, intergovernmental organizations
and all interested partners in the private sector, to explore ways and means to secure appropriate andpredictable sources of trade-finance, in particular in exceptional circumstances of financial crises.
• Themes addressed to the WTO, the IMF and the World Bank
- Better coherence in the design and implementation of trade-related reforms and
monitoring.   As recognized by the Marrakesh Declaration on the Contribution of the World Trade
Organization to Achieving Greater Coherence in Global Economic Policymaking, the inter linkages
between the different aspects of economic policy require that the international institutions withresponsibilities in trade-related areas follow consistent and mutually supportive policies. Therefore a
better scheduling and integration of the work of these international organizations in areas such as
capacity-building and trade infrastructure, including fiscal and customs management , as well as policy
advice and monitoring, could benefit Members.
- The inter linkages between external liberalization and internal reforms . The
importance of the interface between external liberalization and internal policies has been
acknowledged.  To maximize the benefits of such liberalization and the integration of individual
Members in world trade, Members' policies should also be geared to stimulating the supply-response
to market opportunities, taking into account their individual capacities and needs.  This could involvespecific actions to raise domestic private savings and encourage foreign direct investment, in line withWT/WGTDF/W/21/Rev.1
Page 7
the Monterrey Consensus , and to remove obstacles that hinder the development of exports such as
high transport and handling costs, and the poor state of trade infrastructures.
- External financing, commodity markets and export diversification . The
difficulties of most developing countries to attract development finance, from private or publicsources, are acknowledged.  The lack of external financing  is an important element in limiting their
ability to diversify their exports.  Interest was expressed in improving Member's understanding of
factors that lead to high volatility in commodity markets and of factors hampering developing
countries' efforts to move away from commodity exports, despite notable domestic reforms underway.
IV. CONCLUSION
28. The Working Group on Trade, Debt and Finance has proceeded with the examination referred
to in the mandate set out in Paragraph 36 of the Doha Ministerial Declaration. The above list of
themes, agreed by the Working Group as having been the most discussed, is subject of further interest
to Members. Other themes and questions did come up in the course of the Group's work and are
identified in this report; while some Members raised them in relation to the Working Group's
mandate, other Members considered that they could as well be examined in the context of existingbodies of the WTO.WT/WGTDF/W/21/Rev.1
Page 8
Annex 1
WORK PROGRAMME FOR 2002
I. THE RELATIONSHIP BETWEEN TRADE AND FINANCE
A. FINANCIAL ARCHITECTURE AND TRADE
B. TRADE POLICY AND FINANCIAL STABILITY
C. ANY RELEVANT WTO P ROVISIONS
D. OTHER TOPICS RAISED BY MEMBERS
II. THE RELATIONSHIP BETWEEN TRADE AND DEBT
A. EXTERNAL DEBT AND TRADE
B. TRADE -RELATED ISSUES AND ALLEVIATION OF THE EXTERNAL INDEBTEDNESS OF
DEVELOPING AND LEAST -DEVELOPED COUNTRIES
C. ANY RELEVANT WTO P ROVISIONS
D. OTHER TOPICS RAISED BY MEMBERS
III. TOWARDS GREATER COHERENCE
A. ASSESSMENT OF WORK IN PROGRESS
B. ORIENTATION OF FUTURE WORKWT/WGTDF/W/21/Rev.1
Page 9
Annex 2
Summary of contributions received in the Working Group
on Trade, Debt and Finance
(January 2002- June 2003)
Symbol
(WT/WGTDF/W/-)Member / Other
sourceWhere introduced
(Reference in Minutes)Title or Topic
W/1/Rev.1 M/2, Para. 2 Draft Work Programme 2002
W/2 IMF M/1, Para. 9 IMF Conditionality
W/3 Secretariat M/2, Para. 43 WTO Provisions Relevant to the
Relationship between Trade and
Finance and Trade and Debt
W/4 Secretariat M/2, Para. 22 The Relationship between Trade and
Finance – A Review of SelectedLiterature Related to Financial Crisesin the 1990s
W/5/Rev.1 UNCTAD M/2, Para. 6 The Effects of Financial Instability and
Commodity Price Volatility on Trade,
Finance and Development
W/6 Asian Development
BankM/2, Para. 36 Need for Cost-effective and Reliable
Trade Finance
W/7 + Add.1 OECD M/2, Para. 25 Financial Crisis:  Implications for
Trade and Trade Policy
W/8 European
Community andmember StatesM/2, Para. 20
M/3, 
Para. 47Methodological Framework for the
Working Group – Issues forConsideration and Study
W/9 Secretariat M/3, Para. 3 The Relationship between Trade and
Debt – A Review of Selected Literature
W/10 ECLAC M/3, Para. 5 Mechanisms to Deal with Debt
Overhang
W/11 Economic
Commission forAfricaM/3, Para. 22 The Links between Trade and Debt:
The African Experience
W/12 + Add.1 World Bank M/3, Para. 33 Debt Relief for Sustainable
Development
W/13 IMF M/3, Para. 46 World Economic Outlook – September
2002:   Essays on Trade and Finance
and Trade and Financial Integration
Summary
W/14 IMF / World Bank M/3, Para. 40 Market Access for Developing Country
Exports – Selected Issues:   Paper
Prepared Jointly by the Staff of the
International Monetary Fund and the
World Bank
W/15 Draft Annual Report (2002)WT/WGTDF/W/21/Rev.1
Page 10
Symbol
(WT/WGTDF/W/-)Member / Other
sourceWhere introduced
(Reference in Minutes)Title or Topic
W/16 African Group M/5, Para. 4 Treatment of Trade, Debt and Finance
Issues
W/17 Secretariat M/4, Para. 4 Towards Greater Coherence
W/18 Cuba M/4, Para.  30 Analysis of the Relationship between
Trade, Debt and Finance
W/19 OECD M/5, Para. 20 HIPC and Trade Policy Reform:  Some
Early Observations
W/20 Argentina M/5, Para. 14 Trade, Debt and FinanceWT/WGTDF/W/21/Rev.1
Page 11
Annex 3
9 December 2002
NON-PAPER BY THE CHAIRMAN
1. At the informal consultation held on 8 November, I had an exchange of views with a fairly
large number of delegations on how to proceed with our future work in the run-up to Cancún. We
addressed two points in particular: (1) how to ensure a meaningful outcome for meeting on
17 December, and (2) to establish an outline for future work in the first half of 2003, with a view to
preparing the Group's report to the Fifth Ministerial Meeting.
2.  On the first point, my sense was that Members would react upon the Secretariat's note, which
is expected to focus on what is currently being done under the Coherence mandate and provide ideas
on the orientation for future work, which would take into account discussions of earlier meetings on
the relationships between trade and finance, and between trade and debt. Canada oversaw the
possibility of submitting a paper on this topic, while the African Group came up with a wider paper ontrade, debt and finance, which nonetheless contains ideas about enhanced Coherence
(WT/WGTDF/W/16), and on which I would like to draw your attention.
3. Regarding the second point, it seems that there is a consensus on holding two meetings in
2003 up to the Cancún Ministerial Conference, with a view to prepare the Report to Ministers.
Possible dates are the 28
th of March 2003, for the first meeting, and the 5th and 6th of June (two-days)
for the second. In any case, the report should be ready by July 2003. While some Members
emphasized that the themes, conclusions and possible recommendations (if any) should emanate from
the Members themselves, most considered that the summaries drawn by the Chairman at the end of
each meeting in 2002 would provide a guide, or at least a good start, for discussion. While some
Members believed that it was too early in the process to make recommendations to Ministers, themajority of representatives seemed to support the idea that we should start examining each theme on
the basis on a consolidated list, and determine its st atus (whether the theme should be selected in the
report, and if so, whether it should be selected for the information of Ministers or for
recommendation).  Recommendations, if any, could be of very different nature, for example simply to
ask Ministers to continue research/examination on a particular theme, or to ask that such theme be
dealt with under the wider umbrella of the Coherence Agenda (if it was found to be beyond the remit
of the WTO but still relevant to its work), or to ask that a theme be subject to examination by anotherexisting WTO body.
4. While, on the one hand, the themes examined should not necessarily be limited to those
identified in my summaries, on the other hand, we should be aware that our overall objective is to
present a focused and concise Report to Ministers. I would therefore suggest that we work with a view
to end up with a reduced list rather than an expanded one.
5. The following is therefore the consolidated list of themes identified on my own responsibility,
to which I added tentatively a couple of themes that could emerge from our upcoming meeting on
Coherence (these theme were drawn from the Secretariat Note). With this, we could start thinking
about the structure and content of the report as early as March, and so as to give enough guidance to
the Secretariat to produce a draft for our June Meeting.WT/WGTDF/W/21/Rev.1
Page 12
List of themes identified by the Chairman and contained in the Annual Report (2002) of the
Group
Trade and Finance
• The value of the WTO system in providing stability and economic security in periods
of financial crisis;
• the value of keeping markets open world-wide in periods of financial crisis, so as to
ensure that crisis-hit economies are able to continue to count on exports for foreignexchange earnings and a source of income growth;
• the role of trade liberalization in resource allocation and the resilience of economies
to external shocks;
• the relationship between the exercise being carried out by the IMF and World Bank to
strengthen financial systems, and the negotiations being carried out by the WTO onfinancial services;  and
• based on experience gained in Asia, the need to improve the stability and security of
sources of trade-financing, especially to help deal with periods of financial crisis.
Trade and Debt
• overseas market access restrictions impede the ability of indebted countries to earn
the foreign exchange that they need to serv ice their external debt and avoid resort to
further unsustainable borrowing. Relevant studies suggest that the gains that can be
derived from eliminating barriers on these countries exports outweigh the annual
flows they receive of ODA and debt relief – flows that the Conference of Monterrey
had pledged to increase;
• a global, non-discriminatory reduction of trade barriers in the context of the current
WTO negotiations, especially in areas where distortions affect developing countries'
exports, can make a significant contribution to a durable solution to the problem of
external indebtedness of developing and least-developed countries;
• at the same time, indebted countries can improve the debt servicing capacity of their
economies by properly liberalizing their own trade regimes. This can help boost theirdomestic growth, productivity and exports.  Careful consideration needs to be given
to the timing and sequencing of trade reform in this context, as well as to the cost of
adjustment involved in such liberalization and the assistance needed to meet these
costs;
• trade policy reform in indebted countries needs to be supported by pro-growth
policies, that would involve, inter alia , raising domestic private savings and
encouraging foreign direct investment;
• further examination of the issue of the deteri oration of the terms of trade needed to be
made, as it affects the capacity of countries, despite notable domestic reforms
underway, to service their debt and move away from commodity exports".WT/WGTDF/W/21/Rev.1
Page 13
[Towards Greater Coherence – tentative, based on the Secretariat Note]
For further Study?
• further study on the effect of greater financial and exchange rate instability on trade,
focused on the lessons to be learned from the capital account crises experienced by
emerging economies in the 1990's  [Trade and Finance]
• further examine the links between WTO work on long-term, cross-border investment
and capital account liberalization. [Trade and Finance]
• Examine the links between trade, the decline in commodity prices and indebtedness.
[Trade and Debt]
For further action and greater coherence?
• examine possible mechanisms to keep trade-finance alive in exceptional
circumstances of financial crises. [Trade and Finance; Trade and Debt]
• better schedule and integrate the work of international organizations in areas of
capacity-building and trade infrastructure, so  as to design reforms and implement it
together, thereby lightening the administra tive burden of reform implementation on
local authorities  [Trade and Debt]
__________