RESTRICTED
WORLD TRADE WT/COMTD/M/10
25November 1996
ORGANIZATION(96-4991)
Committee onTrade andDevelopment
Tenth (Special) Session
NOTE ONTHE MEETING OF23SEPTEMBER 1996
Chairman: Mr.Nacer Benjelloun-Touimi (Morocco)
A. Adoption oftheAgenda
1. TheCommittee adopted thefollowing agenda:
A. Adoption oftheAgenda
B. Trade andDevelopment Activities ofIntergovernmental Organizations
C. Other Business:
- Continuation ofthediscussion onthereview oftheparticipation ofdeveloping
countries inthemultilateral trading system including theimpact oftheresults
oftheUruguay Round ondeveloping countries.
- Guidelines fortechnical assistance andCTD'sreport totheGeneral Council.
B. Trade andDevelopment Activities ofIntergovernmental Organizations
2. TheChairman recalled thatthemainpurpose ofthismeeting wastohaveanexchange ofviews
withtheChairman oftheJoint IMF/World Bank Development Committee, Mr.ElKabbaj andthe
Director-General oftheWTO, Mr.Renato Ruggiero, whowould bothaddress theCommittee. As
such, themeeting wasyetanother symbol ofthegrowing cooperation between theWTO andother
international organizations, andanexpression oftheCTD'smandate toserve asafocal point for
considerationandcoordinationofworkondevelopmentintheWTOanditsrelationshipwithdevelopment
related activities inother multilateral agencies. Inthatcontext, herecalled that,attheCommittee 's
meeting of18June, theSecretary-General ofUNCTAD, theChairman oftheGeneral Council, the
head oftheITC, andtheDirector-General oftheWTO eachhadaddressed theMembers. He
furthermore recalled thattheMinisterial Declaration ontheWTO 'scontribution toachieving greater
coherence inglobal economic policy-making called forcooperation withinternational organization
responsible formonetary andfinancial matters. Thismeeting presented aconcrete example ofsuch
cooperation.WT/COMTD/M/10
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3. Mr.ElKabbaj, Chairman oftheJointIMF/World Bank Development Committee, welcomed
theopportunity which hadbeengiven tohimtoaddress theCommittee andsaidthattheCTD, under
thevigorous efforts ofitsChairman, hadinitiated anactive andsubstantial programme aimed at
strengthening thepositive impact oftheWTO onthedeveloping countries. Hewould describe the
jointIMF/World Bank Development Committee 'sscope ofactivity andthewayinwhich itoperated;
itslong-standing interest intrade problems; anditsfuture work. Turning totheCommittee 'sscope
ofactivity, heexplained that,in1974, theGovernors oftheIMFandtheWorld Bank hadcreated
twoMinisterial Committees. OnewastheInterim Committee which, despite itsname, wasinfact
apermanent committee which dealtwithinternational monetary problems, andspecifically withmatters
relating totheInternational Monetary Fund; thesecond committee wasofficially named theJoint
Ministerial Committee oftheBoards ofGovernors oftheBank andtheFund ontheTransfer ofReal
Resources totheDeveloping Countries. Forobvious reasons, thisCommittee tended tobereferred
toastheDevelopment Committee. Since itsterms ofreference consisted ofexamining thequestion
ofthetransfer ofresources tothedeveloping countries, itwasappropriate thattheDevelopment
CommitteeshouldbeajointcommitteeoftheBrettonWoodsinstitutions.UnliketheInterimCommittee,
which wasspecifically linked totheIMF, theDevelopment Committee wasajointcommittee ofthe
twoinstitutions. Itwasimportant topoint outhowever, thatitwasofficially aconsultative body of
theBoards ofGovernors oftheWorld Bank andtheIMF, andnotadecision-making body. However,
sincetheMinisters forFinance and,incertain cases, theMinisters forDevelopment whoweremembers
oftheCommittee, werealsotheGovernors oftheWorld Bank andtheIMF, theirsuggestions carried
considerable weight inthepolitical discussions ofthetwoinstitutions. TheDevelopment Committee
comprised 24members aswellas20observers including, ofcourse, theWTO. Itsmembership reflected
thestructure oftheBoards oftheWorld BankandtheIMF. Thismeant thatsome members represented
onlyonecountry, while others represented wellover20,depending ontheirsize. TheChairman was
chosen bytheCommittee fromamong itsmembers. TheCommittee hadanExecutive Secretary who
coordinated theworkofitsSecretariat andprepared theconference-room papers. Itessentially depended
foritsdocumentation onthehighly-qualified staffoftheFund andtheBank, andoccasionally onstudies
fromother organizations ifnecessary. TheCommittee mettwice ayear, often forahalfday. These
meetings were traditionally followed byaprivate lunch organized attheinitiative oftheChairman,
bringing together themembers oftheCommittee, themember States, thePresident oftheWorld Bank
andtheManaging Director oftheIMF. Thediscussions hadoftenbeeninformative anduseful, covering
awhole range ofissues relating totheproblems ofdevelopment. However, itwaswidely feltthat
theaction oftheCommittee hadnotalways produced significant andlasting results. Indeed, the
Committeehadlaunchedanumberofimportantinitiatives,forexamplethecreationofanInterestSubsidy
Fund attheWorld Bank in1974, theSpecial Assistance Facility forSub-Saharan Africa in1985, and
more recently, theEnvironmental Facility. However, foravariety ofreasons, including thefactthat
itsrolewasonlyconsultative andthattheDirectors andBoards hesitated toentrust itwithparticularly
sensitive matters, theCommittee hadnotreally established areputation foraccomplishing whatitset
outtodo.While itwastoosoontosaythattheCommittee hadclearly taken onanewrole,itwas
certainly moving inthatdirection. Ever since hehadtaken overtheChairmanship 18months ago,
hehadbeenconvinced thatitsrolehadtochange. Thatconviction wasshared byMr.Wolfensohn
andMr.Camdessus. Withthesupport oftheother members, theyhaddonetheirutmost tostrengthen
theCommittee, andconcrete results were showing.
4. Mr.ElKabbaj wentontosaythatthemost important ofthose concrete results involved the
problem oftheexternal debtoftheheavily indebted poorcountries forwhom current mechanisms did
notsuffice toreduce theburden toaleveltheycould support. Estimates suggested thatfuture progress
towards development ofsome 20ofthose countries depended ontheirexternal debtbeing brought
backdown toaleveltheycould handle. Thisinitiative, which hadbeendiscussed invarious fora,
inparticular attheG7summit, hadreceived considerable support, andhewashopeful thatitwould
beadopted atthenextmeeting oftheCommittee. Itwould concern allofthemembers ofthefinancialWT/COMTD/M/10
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institutions: creditors, debtors, donors, etc.TheCommittee alsointended toaddress another central
issuenextApril, namely theprospects forthefuture replenishment oftheresources oftheInternational
Development Association (IDA), which wasthecentral bodydealing withinternational aidtothepoorest
ofthedeveloping countries. Herecalled thatthereplenishment oftheIDA'sresources wasdirectly
linked tothebroader issueoftheprospects forallforms ofconcessional aidrequired tohelpthepoor
countries become active participants intheglobal economy. Thetransfer ofresources wasthemain
purpose underlying thecreation oftheDevelopment Committee 22years ago,anditsfounders nodoubt
hadtheincrease oftheflows ofofficial development assistance inmind. Henoted that,withthe
increasinginter-dependenceoftheinternationaleconomyandthegrowingdiversityamongthedeveloping
countries overthepastfewyears, theCommittee hadgrown conscious oftheimportance ofaddressing
issues suchasprivate funding, investment, trade, andthesoundness ofmultilateral development
institutions,andlastyear,inparticular,ithadexaminedthequestionofcoordinationbetweenthedifferent
financial aidinstitutions andtheregional banks. Inthisconnection, theCommittee haddeveloped
orstudied anewwayofcoordinating those different institutions andhaddrawn upareport commonly
known astheTaskForce report onthecoordination ofallregional bankinstitutions, theWorld Bank
andallofthefinance institutions.
5. Mr.ElKabbaj pointed outthatefforts were alsomade toenhance theefficiency ofthe
Development Committee byrevising thewayinwhich itoperated. Thetraditional approach ofthe
Development Committee consisted ofholding alongplenary meeting during which the24Ministers
andfiveorsixobservers would make statements which tookupthemorning. Thisleftlittletimefor
theMinisters toconsider thebasicproblems inanydepth, andindeed, some Ministers preferred simply
tomake theirstatements andleavethemeeting. Inagreement withMr.Wolfensohn andMr.Camdessus,
theCommittee hadtaken theinitiative ofproposing thatthestatements should bedropped, which the
Ministers unanimously adopted. Hewasnowresponsible forsummarizing before theCommittee all
ofthecontributions bytheMinisters inonestatement totheplenary. Asaresult, theCommittee now
spent mostofthetimeavailable onthefundamental problems inrestricted meetings ofthe24Ministers.
ThediscussionswouldthenbesummarizedinashortcommuniquéreflectingtheCommittee'sconsensus.
Theluncheon wasnowdevoted morespecifically tosubjects relating tothegeneral strategic orientations
oftheWorld Bank itself. Hehadbeenpleased toseethatthisprogress washighlighted atthelast
G7summit,inLyon,whichissuedacommuniquéstatingthat"thereformoftheDevelopmentCommittee
hadmade itpossible forMinisters from developed andthedeveloping countries toconsider issues
together andprovide guidance totheinstitutions". TheCommittee expected towork along thelines
described inthecommuniqué. There wasstillalongwaytogo,butsome encouraging progress had
beenmade andefforts werebeing pursued toturntheCommittee intoatrueforum forpolitical decision-
makers throughout theworld.
6. Turning tothetrade aspects oftheDevelopment Committee, Mr.ElKabbaj saidthat,with
theincreasing interdependence ofglobal economies, thelinks between trade anddevelopment had
acquired great importance within theDevelopment Committee inthemiddle ofthe1980s. The
Committee hadfirstaddressed theissue in1983, andhadrecognized thatfreemarket access for
developing country exports wasanessential element ofsupport intheiradjustment efforts inconnection
withtheirsearch foralong-term solution tothedebtproblem. TheCommittee hadalsowelcomed
GATT 'sefforts toliberalize andreinforce theinternational trade system, including thepromotion of
anewround ofnegotiations inwhich boththedeveloped andthedeveloping countries could participate
actively together. AtthestartoftheUruguay Round, theMinisters forfinance considered thatitwas
important forthem tofollow thedevelopment ofthenegotiations closely. Thus, theCommittee had
become aforum tofocus itsattention ontheimportance ofthetrade aspects. Herecalled thatsome
Ministers forfinance, including several fromthedeveloping countries, hadnotalways beeninvolved
inthese aspects, inspiteofthesignificant impact oftrade policy onthegeneration ofresources for
development.DuringtheUruguayRound,theDirector-GeneralofGATThadreportedtotheCommitteeWT/COMTD/M/10
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every sixmonths ontheprogress ofthenegotiations. TheMinisters hadrepeatedly expressed their
hopethattheUruguay Round would becompleted rapidly andachieve positive results. Onseveral
occasions, moreover, trade aspects hadheaded theCommittee 'sagenda. Onthebasis ofstudies by
theBank andtheFund andtheopinions oftheGATT Council, theMinisters hadexamined the
implications oftheregional trade agreements, theimpact ofindustrial, trade andagricultural policies
ondevelopment, andtheneed fortheWorld Bank andtheIMFtojoinGATT insupporting the
developing countries intheirefforts toliberalize trade. Thepotential impact oftheconclusions of
theUruguayRoundonthedevelopingcountriesandothertrade-relatedmattershadalsobeenconsidered.
Over thepastfewyears, many developing countries hadbecome much more aware ofthepotential
benefits oftradeliberalization. Atthesame time, several industrialized countries hadshown agreater
understanding oftheproblems experienced bythedeveloping countries inintegrating intotheglobal
economy. Inthatrespect theDevelopment Committee hadplayed auseful roleinharmonizing the
different viewpoints. TheCommittee hadwelcomed theMarrakesh Agreements in1994, andgiven
considerable attention toencouraging theeffective implementation oftheconclusions oftheUruguay
Round. Atthesame time, he,asitsChairman, hadstrongly recommended increased liberalization
oftheagricultural andservice sectors inorder toensure tangible benefits forthedeveloping countries,
andhadrequested theBank andtheFund toassist thedeveloping countries, including thetransition
economies, toaccede totheWTO. TheCommittee hadwelcomed theestablishment ofthenew
OrganizationandhadencouragedclosecooperationbetweentheWTOandtheBrettonWoodsinstitutions.
7. Mr.ElKabbajnotedthat,thus,overthepastdecadethemembersoftheDevelopmentCommittee
andtheBretton Woods institutions hadgiven special attention totheconvergence ofthework ofthe
GATT/WTO andofthetwointernational financial institutions. Thisconvergence hadbecome more
andmore necessary inviewoftheincreasing globalization ofmarkets andtheinterdependence ofthe
commercialandfinancialspheresininternationaltrade.Thetrendtowardsglobalizationandliberalization
oftradeposed twomajor types ofchallenge. First, theevents of1994, inparticular theMexican crisis -
thesignificant fluctuations inexchange ratesbetween theprincipal currencies andtherepercussions
ofthose fluctuations onother currencies -hadunderscored theincreasingly decisive influence ofthe
globalization offinancial markets ontheworld economy asawhole, andtheriskthatiftheirdisciplines
wereignored, theymight sheddoubt onthestabilization andliberalization programmes ofthedeveloping
countries inparticular. Thishadledhimtoconclude thatglobalization hadtobecoupled witha
strengtheningofmultilateraldisciplineswithrespecttobothtradeandfinancing,andthatthosedisciplines
should serve tomaintain aninternational environment which waspermanently bothstable andsecure.
Thetrade policy review mechanism hadtobeaccompanied byasimilar mechanism inthefinancial
area. Second, globalization oftheeconomy called forincreased dialogue between thedifferent
multilateral institutions andaneffort towards international solidarity ifitwastocontribute tothe
integration ofthedeveloping countries intotheglobal economy rather thantotheirexclusion. These
weretheprincipal challenges facing theinternational community initseffort toensure thatglobalization
andtheincreasing interdependence oftrade andfinance would develop intoanirreversible process
benefiting everyone. Aquote fromthespeech ofHisMajesty KingHassan IIattheclosing ceremony
oftheMinisterial Meeting oftheUruguay Round, heldinMarrakesh inApril 1994, provided aperfect
illustration ofthesechallenges: "This globalization could leadtogreater inequalities between countries
andaggravate thesymptoms ofsocial exclusion thatarejustasprevalent intheaffluent countries as
intheless-affluent countries. Inother words, itcallsforthecreation andimplementation ofnew
collective solidarity mechanisms anddemands anewapproach totheproblems ofeconomic andsocial
development.Thereasonwhyagoodnumberofdevelopingcountriesboldlyrestructuretheireconomies
inorder tointegrate themmore easily intotheinternational economy isthattheyareconvinced ofthe
virtues offinancial austerity andoftheneedtolimitthesocial costwhich theywilltemporarily have
tosupport. Thedeveloped countries mustoffset thiscostwithsymmetric adjustments designed tofavour
market access andtransparency intheconditions offaircompetition, inparticular through greater
monetary stability."WT/COMTD/M/10
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8. Turning totheoutlook andrelations between theDevelopment Committee andtheWTO,
Mr.ElKabbaj saidthathehadbeenimpressed throughout hischairmanship bythefrequent contacts
between representatives oftheWTO, theIMFandtheWorld Bank. Their regular meetings andthe
support oftheUnited Nations Secretary-General wereimportant instrengthening cooperation among
thosekeybodies. Hewaslooking forward tohearing WTO 'sDirector-General address theDevelopment
Committee inthecontext ofthatcooperation. Indeed, Mr.Ruggiero hadbeeninvited toholddiscussions
withtheMinisters ontheissues -andparticularly those concerning thedeveloping countries -which
werelikely tobediscussed during thefirstWTO Ministerial Conference inSingapore nextDecember.
Heacknowledged thattheagenda ofthatimportant meeting hadnotyetbeenprecisely defined, and
thatWTO 'sCommittee onTrade andDevelopment hadanimportant roleinitspreparation. Ministers
members oftheDevelopment Committee wereeager tolearn more about theprogress made since the
conclusion oftheUruguay Round anddevelopments inother fields inwhich amore active follow-up
wasrequired andwhere much remained tobedone. Hewasalsoaware thattheWTO, theBank and
theFund wereworking together onthedevelopment ofcooperation agreements. Hewashopeful that
therapid andsuccessful conclusion ofthese agreements would further strengthen theconstructive
cooperation thatwasalready operating atseveral levels between theWTO andtheBretton Woods
institutions, inkeeping withtheirrespective mandates. These institutions hadcomplementary functions,
andhadallcontributed sincetheircreation tothedevelopment andmaintenance ofanopeninternational
trade system. Theagenda oftheDevelopment Committee would continue todevelop. Though he
wasnotinaposition totelldelegations whatthatagenda would contain beyond nextApril, heassured
themthattheIMF/World BankDevelopment Committee would continue toexamine issues which were
trulymeaningful andhadsignificant implications forthemember countries. Inanycase,hewashopeful
thattheissues directly linked totradewould appear ontheCommittee 'sfuture agenda andthatwherever
theydid,theWTO would participate actively intheIMF/World Bank Development Committee 's
discussions.
9. Mr.ElKabbaj concluded bysaying that,while theDevelopment Committee wasactive and
useful, hewasdetermined tocontinue, throughout histermasChairman, towork closely withthe
representatives oftheBank andtheFund andwithhiscolleagues toturntheCommittee intoaneven
more useful forum inwhich thevariety ofviewpoints onmajor political issues inthose institutions
could beheard.
10. TheChairman thanked Mr.ElKabbaj foraclear andcomplete statement onthehistorical
background, roleandfuture outlook fortheCTD. Hetheninvited Mr.Ruggiero toaddress themeeting.
11. TheDirector-General oftheWTO saidthatheconsidered theparticipation oftheChairman
oftheJoint IMF/World Bank Development Committee intheWTO 'sCommittee onTrade and
Development notonlyasignofcloser coordination butalsoyetanother signofthegrowing importance
oftrade foreconomic development. Ahead were many challenges, andmany unprecedented
opportunities. Thegrowing interdependence ofcountries could notbestopped. Onequarter ofworld
trade today wasonaccount ofdeveloping countries; one-third ofthemostimportant importers and
exporters weredeveloping countries. Twenty years ago,5percentofdeveloped country imports came
from developing countries; thisfigure grew to15percentin1990. Today itwas20percentand
wasprojected toincrease to25percentintheyears ahead. In1995, annual salesofforeign affiliates
ofmultinational corporations wereestimated toexceed thevalue oftraded goods andservices which
wereover6,000 billion dollars. Foreign direct investment inflows hadincreased toover300billion
dollars, about one-third ofittodeveloping countries with10countries absorbing about 80percent
ofthetotal. OncetheUruguay Round Results would befullyimplemented, 40percentofindustrialized
countries 'imports would bedutyfree.Thiswastheperspective ofthegrowing interdependence between
developed anddeveloping countries. Initsrecent report, UNCTAD hadpointed outthatonceagain
growth indeveloping countries exceeded thatindeveloped countries, andforthefirsttimeserved asWT/COMTD/M/10
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themotor forgrowth. Ofrealsignificance wasthattheoutlook forgrowth inAfrican countries was
positive andthatinthepasttwoyears, some hadachieved growth ratesof5percentormore. This
showed thatitwaspossible tochange eventhemostdifficult reality. Therelationship waschanging
between developed anddeveloping countries, with both becoming increasingly interdependent.
Developingcountrymarketswereimportantforindustrializedcountries.Economicgrowthindeveloping
countries wasimportant fortheindustrialized countries 'owngrowth and,hence, itwasintheirown
interest toensure continued market access intotheirmarkets forexports from developing countries.
Atthesametime, developed countries would befaced withtheneedforstructural adjustment. Arecent
report ofUNCTAD projected thatinthenexttenyears 12percentofmanufacturing employment in
developed countries would beaffected byimports fromdeveloping countries. Growth indeveloping
countries hadthusanimpact ongrowth indeveloped countries, andtherelationship wasnolonger
onebetween donor andbeneficiary. Trade wasanimportant element inthegrowth strategy, more
thanaid:astheprospects foraidweakened, theimportance oftradeincreased. Interdependence cannot
justbetrade. Itcovers alsoinvestment. Important interlinkages between trade andinvestment would
beanalysed intheannual report oftheWTO thisyear. Investment policy wasveryimportant fora
development strategy. Investment flows brought transfer oftechnology, management capacity and
know-how, particularly forthepoorest countries. Liberalization wasnotaconcession, regardless of
whether itwasundertaken bydeveloped ordeveloping countries; thelogicofchange required countries
togoforward inpartnership. Thetelecommunications sector wasaclearexample. Liberalization in
thissector would beinthecommon interest: noeconomic future waspossible without thetechnological
advances intelecommunications. TheDirector-General emphasized onceagain thecommon interest
ofcountries asreflected intheinterdependent relationship, andsaidthatitwould bereinforced by
work inthisCommittee tofurther theintegration ofdeveloping countries inthemultilateral trading
system.
12. TheDirector-General went ontosaythattheproblems faced byleast-developed countries
represented afailure onthepartoftheinternational community andposed abigchallenge. Herecalled
hisproposals totheG7countries gathered atLyon earlier thisyear, inparticular, first,toextend duty
freeaccess forallproducts exported byleast-developed; second, toimplement measures toimprove
theinvestment flows tothepoorest countries; third, toimprove coordination, notonlywithUNCTAD
andITC,butalsowithmultilateral financial institutions, using newtechnologies toincrease technical
assistance withaviewtostrengthening LLDCs 'human andinstitutional capacity. Hehoped thatthese
threepoints could beincluded inthediscussions inSingapore. Henoted thattheSingapore Ministerial
Conference represented onlyonestep,albeit animportant one,intheprocess ofbuilding aworld trading
system. Hehoped thattheMinisters would sendastrong andunited message.
13. Therepresentative oftheEuropean Communities congratulated theChairman forhisdynamic
roleintrying toachieve alarge degree ofconsensus onquestions tobesubmitted toMinisters at
Singapore. Theintegration intotheworld economy andintothemultilateral trading system of,in
particular, theleast-developed countries wasofconcern notonlytothisCommittee butalsotohis
delegation. TheMember States oftheEuropean Communities hadbeenclearattheirrecent Council
inDublin, heldinpreparation oftheSingapore meeting. There were various ways tohelptheleast
developed countries. While debt-related issues were outside themandate oftheWTO, itstechnical
assistance activities clearly wereameans ofassisting least-developed countries inefforts toimplement
theirobligations resulting from theUruguay Round. Hisdelegation intended toenhance theWTO
technical assistance activities through bilateral andmultilateral initiatives. Hesaidthattheroleofforeign
direct investment inleast-developed countries should notbeunderestimated andhisdelegation hoped
thatthismatter would beaddressed byMinisters intheSingapore inasatisfying manner. Hisdelegation
hadtaken noteoftheDG'sproposal totheG7countries inLyon andwasconsidering itcarefully,
inparticular theproposal relating totariffs. Hisdelegation considered cooperation between theWTO,WT/COMTD/M/10
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IMFandWorld Bank, towhich Mr.ElKabbaj hadalluded, indispensable andfullysupported efforts
tostrengthen it.
14. Therepresentative ofTanzania thanked theChairman forhisroleinensuring thepresence
atthismeeting ofMr.ElKabbaj, whoplayed animportant roleintheinternational financial system.
TheMinister 'saddress hadenhanced hisdelegation 'sunderstanding oftheroleoftheDevelopment
Committee, aswellasthepossible roleoftheBretton Woods institutions inassisting countries which
remained ontheperiphery ofthemultilateral system. Asaresult oftheChairman 'sinitiative toinvite
theHeads oftheWTO, UNCTAD andITCtoaddress theSeventh Session oftheCommittee, lastJune,
anational seminar would beheldshortly inTanzania. Hedrew theattention totheroleofinstitutions
otherthantheWTO inimplementing theresults oftheUruguay Round andtheMinisterial Declarations,
suchastheoneconcerning net-food importing countries, andtheDecision calling forgreater coherence
inglobal economic policy. Hehadoften stressed theneedforcapacity building intheleast-developed
countries, which alsoentailed theinvolvement ofinstitutions other thantheWTO. Hewelcomed the
reference made byMr.ElKabbaj totheneedtoaddress thedebtproblem oftheleast-developed
countries, asthiswastheproblem which mostundermined thepossibility ofanyprogress. Multilateral
debtconstituted asizeable proportion ofthetotaldebtandhewasencouraged bytheprospect thatnew
initiatives would betaken bytheIMF/World Bank Development Committee. Hehoped thatsuch
initiativeswouldbebroad-basedandcomprehensive.Investmentsininfrastructureprojectsbyinstitution
suchastheIDAwerenecessary tocreate aninvestment-friendly environment. Hewasconcerned about
thedecrease inresources atIDA'sdisposal andstressed theimportance oftheirreplenishment atan
adequate level, andinaconsistent andpredictable manner. According toanUNCTAD report, adecline
inflows toleast-developed countries of1.2billion dollars hadoccurred; African countries hadreceived
only1.6percentoftheflowstodevelopingcountries.HewelcomedtheDirector-General'scommitment
toleast-developed countries andhisinitiative topropose azerotariff applicable toexports from
least-developed countries. Hestressed however, that,inorder tobenefit from suchinitiatives, they
should gohand inhand withefforts toenhance human andinstitutional capacity building inleast-
developed countries.
15. Therepresentative ofEgypt stressed thesignificance ofthepresence oftheChairman ofthe
IMF/World Bank Development Committee andthanked theChairman forrevitalising theCTD. Her
government fullysupported theWTO Director-General 'sefforts toachieve acloser cooperation with
theIMFandtheWorld Bank, assuchcooperation wasessential foragreater coherence inglobal
economic policy-making. Fluctuations inworld interest ratesandexchange rates, theirfrequency and
magnitude, aswellastheiroutstanding debtburden, depressed thevolume andvalue ofexports from
developing countries. Sherecalled thatdeveloping countries hadhoped thatsuchissues would have
beendealtwithmore comprehensively intheMarrakesh Declaration. Shelooked forward tosupport
from theJoint IMF/World Bank Development Committee inachieving greater cooperation between
theBretton Woods institutions andtheWTO, withaviewtoensuring themonetary andfinancial stability
necessary forastable tradeflow. Alinkbetween theinternational financial institutions andtheWTO 's
Trade Policy Review Mechanism should leadtostrengthened multilateral surveillance, inparticular
ofthemajor economies. Shefurthermore noted that,eventhough thejointIMF/World BankCommittee
wasaconsultative body, itcould useitsweight inthedecision-making process. Sheagreed withthe
representative oftheEuropean Communities, thatcoordination between institutions wasindispensable.
16. Therepresentative ofParaguay thanked theChairman forhisinitiative inholding thissession,
andMr.ElKabbajforhisoverviewoftheroleoftheDevelopmentCommittee.HerecalledtheDirector-
General 'sintervention withrespect totheinterlinkages intheworld economy andagreed that,as
globalization andliberalization ledtogreater integration, theyalsoledtogreater imbalances. Technical
assistance wasonewayofcoping withthechallenges presented bysuch imbalances. Increased
coordination among international institutions could rationalize andoptimize technical assistance. HeWT/COMTD/M/10
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hoped thatthepriority given totheneediest countries indelivering suchassistance would notbeat
theexpense ofcountries suchashistomeetgrowing challenges.
17. Therepresentative ofPakistan thanked theChairman forinviting Mr.ElKabbaj and
Mr.Ruggiero. Henoted thatdespite impressive macroeconomic indicators inthepastdecade, there
hadbeenlittleimpact onthelevelofpoverty. Perhaps thiswasanindication thatthedevelopment
recipes traditionally prescribed fordeveloping countries needed toberevisited.
18. Therepresentative ofPerusaidthatthepresence ofMr.ElKabbaj andMr.Ruggiero inthe
Committees 'meeting wasimportant inviewofthenecessary dynamic linkbetween trade, money and
finance, something towhich boththeChairman andtheDirector-General werecommitted. Achieving
greater coherence between theWTO andtheBretton Woods institutions should havepriority forall
three institutions. Theproblems faced bynetfood-importing countries andtheclose links between
trade andinvestment were among theissues which required close cooperation.
19. Therepresentative ofIndia thanked theDirector-General forhispresence andtheChairman
forconvening thismeeting. Hewelcomed thethought-provoking ideasofMr.ElKabbaj, particularly
withregardtotheneedforimprovedmarketaccessfordevelopingcountriesandleast-developedcountries
asameans ofgreater integration. Hisgovernment hadaprofound interest intheroleandfunctioning
oftheJointIMF/World Bank Development Committee andhestressed theimportance ofmaintaining
flexibility intheexercise ofnational sovereignty inforeign policy formulation asdeveloping andleast-
developed countries faced greater globalization. Inthiscontext hesuggested thattheconclusions of
therecent UNDP World Development Report, inparticular totheeffect thatglobalization hadresulted
ingreater marginalization ofleast-developed anddeveloping countries, bediscussed intheCTD.
20. Therepresentative ofCoted'Ivoire enquired astotheroleofthefinancial institutions inhelping
developing countries fulfiltheirWTO commitments. Incountries suchashers,theWorld Bank linked
itsassistance toobservance oftheWTO requirements. Shewould alsoappreciate more information
ontheIMFandWorld Bank'sactivities toassist developing countries inbuilding production capacity.
21. Therepresentative ofKenya joined other delegations inthanking theChairman. Sheexpressed
herappreciated fortheparticipation ofMr.ElKabbaj inhiscapacity asChairman oftheIMF/World
Bank Development Committee. Shealsonoted theDirector-General 'suntiring efforts toincrease the
influence ofdeveloping countries onissues related toworld trade. Increased linkages between trade
policy andeconomic policy required greater coherence inglobal economic policy making andcalled
forcloser cooperation andconsultation between theseinstitutions. Shereferred totheWTO agreements
withlinkages toIMFprogrammes, inparticular theAgreements onCustoms Valuation, Subsidies,
Safeguards, Anti-dumping, Trade-Related Investment Measures andtheGATS. Hergovernment was
intheprocess ofbringing itsnational legislation intoconformity withWTO obligations aswellas
developing thenecessary institutional framework toimplement theWTO agreements. Shewondered
howdeveloping countries could reconcile theirobligations under theWTO agreements which called
forfreermarket access withtheirobligations under IMF/World Bank supported programmes calling
forincreased revenue collection.
22. Mr.ElKabbaj saidthathewasconfident thattheDirector-General 'sinitiatives onmarket access
andforeign direct investment would bewelcomed bytheIMF/World Bank Development Committee,
eventhough theinternational community hadyettocome forward withapositive response. Hewas
certain that,incollaboration withtheheads oftheIMFandoftheWorld Bank, genuine efforts would
beforthcoming togivethese proposals aconcrete content. Cooperation between theinstitutions had
becomeanecessity,sinceeconomicandsocialdevelopmentdidnotcomeaboutsimplythroughaone-way
transfer ofresources butcalled foraglobal approach, linking various elements suchastrade, investmentWT/COMTD/M/10
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andtransfer oftechnology andknow-how. Heassured therepresentative ofTanzania thatthe
Development Committee hadfullyrecognized theproblems created byaheavy debt-burden particularly
onthepoorest countries. Thiswasborne outbyitslatest debt-initiative fromwhich Tanzania would
bebenefitting: modalities forthisinitiative should beinplace aftertheforthcoming jointIMF/World
Bank meeting. While theDevelopment Committee recognized theproblems resulting frominadequate
resources, neither thetenthnortheeleventh replenishment ofIDAfunds hadcome toalevelnecessary
tocover allprogrammes. InJuneofthisyear, IDAhadreceived pledges for14.5billion SDR'sover
athree-year period, andhewashopeful thataspecial effort would getunderway torestructure and
reinforce theeconomies ofleast-developed countries andtoincrease theirproduction capacity. Along
withIDAresources, investment flows wereimportant, notonlyforbalance ofpayment reasons but
alsobecause suchflowenhanced possibilities tobecome more integrated intheglobal economy. The
Development Committee straddled bothBretton Woods institutions andcounted ministers ofboth
developing anddeveloped countries among itsmembers. Their presence would ensure thatdecisions
weretranslated intoaction. Alleviation ofpoverty wasattheheart oftheIMFandtheWorld Bank'
activities.ThishadbeenhighlightedinthelatestWorldBankReportandhadpromptedthedebt-initiative
andtheinitiative toincrease resources available toIDA. Theprogrammes supported bythefinancial
institution encouraged theestablishment ofefficient institutions capable ofmeeting thechallenges of
globalization. Theapparent conflict referred tobytherepresentative ofKenya wassomething ofreal
concern; hesuggested thatcountries usetheexpertise available intheinstitutions concerned toavoid
theconflicts referred to.
23. TheDirector-General thanked theChairman forhisroleinrevitalizing anessential partofthe
WTO system. Duetothisrenewed vitality hewasnowaddressing theCommittee onTrade and
Development forthethirdtimethisyear. Healsothanked Mr.ElKabbaj forsupporting hisinitiative
toestablish dutyfreeaccess forexports oftheleast-developed countries. Herecalled thattheG7had
requested thathepursue thisproposal and,along withother initiatives forstrengthened technical
assistance, bring ittotheSingapore Ministerial Meeting. Inthatcontext, heunderlined theimportance
ofsupport fromtheDevelopment Committee. Further, hesaidthattrade wasanengine ofeconomic
growth andassuch, initsefforts toachieve thegreatest possible degree oftrade liberalization, the
WTO wascontributing tosuchgrowth. While herecognized theunequal distribution ofwealth and
immobility ofthepoorer sections ofsociety, henoted thatthiswasnottheconsequence oftrade, greater
liberalization orofincreasing globalization. Hedidnotagree thatmarket opening resulted inthe
marginalization ofdeveloping andleast-developed countries. Distribution ofwealth needed positive
action atthenational leveland,asreferred tobytheChairman, action byother international agencies.
While thesolutions totheseissues felloutside thefieldofresponsibility oftheWTO, itwasnevertheless
amatter ofgreatconcern andtheWTO wasmaking every effort toimprove coordination inthisregard
withother major international agencies suchastheIMF, theWorld Bank andUNCTAD. Thelatest
report bytheUNDP haddrawn attention tothefactthattheliving standards of3,000 million people
hadimproved beyond levels everexperienced before. Butseveral hadbecome worse off.Hesaid
thattheproblem wasoneofdistribution, andnoted thatthesamereport alsoconcluded thatthehuman
development index hadgoneupinmostregions overthepastthree decades. TheDirector-General
re-emphasized thatdistribution policies, rather thanglobalization, hadledtomarginalization. Hethen
noted thatprogress ininformation technology wasanimportant element intheglobalization process.
Inthiscontext hesaidthattheWTO andtheWorld Bank werejointly exploring concrete possibilities
tocooperate intheareaoftechnical assistance, inparticular onmodalities tomake fulluseofnew
technological tools.
24. TheCommittee tooknoteofthestatements made.WT/COMTD/M/10
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C. Other Business
- Continuation ofthediscussion onthereview oftheparticipation ofdeveloping countries
inthemultilateral trading system including theimpact oftheresults oftheUruguay
Round ondeveloping countries
25. TheChairman recalled thattheCommittee haditsfirstdiscussion onthisitematitslastsession,
based onanotebytheSecretariat, contained indocument WT/COMTD/W/15.
26. Therepresentative ofEgypt saidthatshewould liketomake some comments onthestudy
contained indocument WT/COMTD/W/15, inviewofitsrelevance asaninput intothepreparatory
process forSingapore, interms oftheassessment oftheimplementation ofUruguay Round results
andtheirimpact ondeveloping countries, inparticular theleast-developed, andAfrican countries.
While sheappreciated thenoteespecially foritsscope andwiderange ofissues itcovered, itnevertheless
needed careful consideration inviewofherdelegation 'views onitsuse.Certain conclusions could
becalled intodoubt, duetothehighly aggregate levelofitsanalysis, which didnotallow formore
accurate conclusions. Inparticular conclusions ontheextent oftheerosion ofpreferential margins
forAfrican countries, ontariff escalation andonpeaktariffs. Furthermore, itwasunclear whether
thepaper referred tosimple orweighted tariff averages. Thenotewasfactual rather thananalytical,
focused more ontrends without analysing underlying factors andcauses. Herdelegation hadcautioned
onanumber ofoccasions against increased marginalization ofthemorevulnerable developing countries.
Some aspects oftheresults oftheUruguay Round rantheriskofbeing atthebasis ofanaccelerated
marginalization ofthevulnerable economies, ifnotaddressed carefully tomitigate theirnegative effects.
Forexample, asaresult oferosion ofpreferential tariff margins, some ofthese countries would not
beabletocompete, hence would loose market share andoverall export earnings. Assome ofthese
countries werealsonetimporters offoodstuff, higher foodprices would swell theirimport bills. A
combination ofthese factors would worsen their situation dramatically. Inaddition tofurther
marginalization,theywouldalsoruntheriskofseeingtheireconomicgrowthprospectsseverelyaffected.
These factors should beadequately analysed intheframework oftheoverall implementation ofthe
Uruguay Round results andsubmitted toMinisters inSingapore. Turning tomore specific parts of
thenote,shesaidthattheobservation thatinsomeinstances thecountries withapoorexport performance
hadbetter access toindustrial country markets thanthose countries whose exports expanded rapidly,
failed totakeintoaccount different levels ofdevelopment, therapid growing ratesofinvestment in
some countries compared toothers, theeffective utilization ofGSPbythemore advanced developing
countries, inshort didnotanalyse underlying factors fortheirweak export performance. Shenoted
alackofin-depth analysis oftheconcept of"other external factors", ascause forpooreconomic
performance. Suchfactors should beatthebasisoftheupcoming coordination withtheBretton woods
institutions onglobal coherence. TheCTD should study more indepth thecause andtheeffect of
factors suchasfluctuations inworld interest rates andexchange rates onvolumes andvalues of
developing countries 'exports, theimpact ofcommodity prices andthecyclical change indemand in
industrialized countries fortheirexports, andtheimpact ofoutstanding debtontheirtradeperformance.
SherecalledthatthesewereamongtheissuesdevelopingcountrieshadhopedtoincludeintheMarrakesh
declaration. Sheexpressed surprise atthefactthatsome ofthemore important issues, suchasthe
effects ofanti-dumping investigations, wererelegated tofootnotes rather thanbeing among themain
factors analysed; there wasalsonoidentification ofsectors mostaffected. Theoptimistic evaluation
oftheadvantages flowing fromthefullimplementation ofthetariff commitments made bydeveloped
countries intheUruguay Round failed totakeintoaccount thatnewnon-tariff measures, andnew
conditionalities onpreferences, often practically impaired andnullified Uruguay Round benefits.
Although ariseinthelevelofbindings wasapositive outcome, itwasmisleading tosuggest that,once
atariffreduction wasfullyimplemented, benefits wereassured fordeveloping country exporters. The
security ofbound MFN tariffs wasnotalways acompensation forlossinpreferential margins. SheWT/COMTD/M/10
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would appreciate more analysis oftheimpact oftheAgreement onAgriculture onNon-food importing
Countries. Statistical models including onedeveloped byUNCTAD (and used forajoint
WTO/UNCTAD study) could beusedforsuchananalysis. Shefound itsurprising thattheprerequisites
foramore effective integration enumerated inthepaper related exclusively towhat could bedone
bydeveloping countries themselves. Itfailed tomention factors suchasnewdisguised protectionist
measures, thenecessity toadhere strictly totheimplementation oftheAgreements andtheinadequate
implementation ofthevarious provisions stipulating technical andfinancial assistance. Amore
comprehensive assessment oftheprerequisites foramore effective integration should betaken up,
inthelightofthereplies totheChairman 'srequest forinformation ontheimplementation ofprovisions
infavour ofdeveloping countries from theChairpersons oftherelevant Committees andCouncils.
Shethanked theSecretariat forthestudy andsaidthatherdelegation would lookintoways howbest
toprepareforthenecessaryfollow-upandrecommendationsinthisregardfortheMinisterialConference
inSingapore.
27. Therepresentative ofIndia drew attention toaprevious intervention andspecifically recalled
hisrequest thatafuture version ofthepaper givesufficient prominence totheroleofdomestic
investment. Notwithstanding theclarification thattheapparent lackofprominence inthepaper given
totherelevance ofdomestic savings ratios resulted from thefactthatitsimportance wasabasic
assumption andthusself-evident, hewasoftheview thatthereport should dealwithitadequately
inthebody ofthereport, rather thaninafootnote. Healsosaidthattheparagraph describing the
positiveinterlinkagesbetweenforeigndirectinvestment,exportperformanceandothereconomicfactors,
wasrather unbalanced. Therecent UNCTAD report onTrade andDevelopment contained sufficient
material toputintoquestion statements inthatparagraph andhesuggested thattheSecretariat reconsider
thatparagraph inthelightoftheUNCTAD report.
28. TheChairman saidthatthestudy wasintended toengender discussion which ithadobviously
accomplished. Despite thedifficulties togenerate unanimous acceptance forsuchastudy, hehoped
thatitwould bepossible toagree tocertain guideposts forfuture action.
29. TheCommittee tooknoteofthestatements made andagreed torevert tothisitematitsnext
session.
- Draft guidelines fortechnical cooperation
30. TheChairman saidthatthecomprehensive comments bydelegations atthelastsession onthe
draftguidelines fortechnical cooperation andthewritten submissions hadbeenthebasis ofarevised
version. Hesuggested toannex theguidelines, aftertheiradoption, totheCTD'sreport totheGeneral
Council. Apolitical statement ontheimportance oftechnical cooperation, onwhich many delegations
hadplaced importance, would bepartofthereport totheGeneral Council.
31. TheCommittee tooknoteofthestatement made andagreed torevert tothisitematitsnext
session.