RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTDF/W/34/Rev.1 
6 October 2005 
 (05-4490) 
  
  
 
DRAFT 
 
REPORT (2005) OF THE WORKING GROU P ON TRADE, DEBT AND FINANCE  
TO THE GENERAL COUNCIL 
 
Revision
 
 
 
I. INTRODUCTION 
1. The Working Group on Trade, Debt and Finance was established at the 4th Session of the 
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 multila teral trading system to contribute to a 
durable solution to the problem of external indebtedness of developing and least-developed countries, and to strengthen th e coherence of international trade and 
financial policies, with a view to safeguarding the multilateral trading system from the effects of financial and monetary instab ility.  The General Council shall report to 
the Fifth Session of the Ministerial Conference on progress in the examination." 
2. The Report to the General Council prior to the 5
th Session of the Ministerial Conference is 
contained in WT/WGTDF/2.  At that time, the Ge neral Council took note of the work that had been 
accomplished by the Group, and of the agreement in  the Group to continue its examination process on 
the basis of eight themes that were identifie d as being of further interest to Members.2  On 1 August 
2004, the General Council agreed that a report to the 6th Session of the Ministerial Conference on the 
Working Group's work should be made in line with its Doha mandate.   
II. THE GROUP'S ACTIVITIES SINCE THE 5TH SESSION OF THE MINISTERIAL 
CONFERENCE 
A. OVERVIEW  
3. In response to interest raised in the Working Group about the issue of trade financing, the 
International Monetary Fund (IMF) held a seminar in  May 2003 with the invo lvement of the principal 
stake-holders, including international financial ins titutions, other multilateral organizations such as 
the WTO, regional development banks, export credit ag encies and private sector banks.  This seminar 
served as a basis for a paper by the staff of the IM F laying out proposals to ensure more secure and 
                                                      
1 WT/MIN(01)/DEC/1, para. 36. 
2 WT/WGTDF/2, paras. 27 and 28. WT/WGTDF/W/34/Rev.1 
Page 2  
 
 predictable sources of trade-finance.  In January 2004, the Director-General, Dr. Supachai, followed 
up by inviting the same group of experts to discuss the contribution that the WTO could make to the 
process (see WT/WGTDF/W/22 and 23).  Dr. Supachai briefed the General Council on 12 February 2004 on his initiative, and suggested th at the issue be brought back to the Working 
Group.   
4. The Working Group held six formal meetings  between May 2004 and October 2005 (13 May 
2004, 4 October 2004, 10 December 2004, 18 April 2005, 4 July 2005 and 3-4 October 2005).  The Working Group was chaired by Ambassador Pé ter Balás (Hungary) in 2004, and in 2005 by 
Ambassador Kweronda-R uhemba (Uganda).  
B. T
RADE FINANCING  
5. At its meeting on 13 May 2004, the Working Group addressed the topic of trade financing.  
The representative of the IMF recalled that during r ecent financial crises, trade financing to crisis 
countries fell dramatically.  The scale of the collapse seemed to be disproportionate to the level of 
risk.  A concern to the IMF had been that a collap se in trade finance meant that a country's ability to 
export – and therefore to increase export earnings to help it out of a crisis – could be seriously 
compromised.  As to the lessons to be learned, it appeared that improving the resilience of emerging 
market economies was the key objective to achieve in order to avoid future crises of this kind.  The 
focus needed to be on implem enting the right economic policies and institutional reforms to 
strengthen the legal and regulatory framework for international transactions, foster competition in 
foreign trade sectors, and deepen local capital market s.  Recent experience suggested that an effective 
approach could be built around mu ltilateral development bank trade -finance facilities in support of 
actions by the country authorities to facilitate a resu mption of private sector financing, complemented 
by a more coordinated approach by export credit agencies.   
6. The representative of the WTO Secretariat recalle d that the first discussion on trade financing 
had taken place in the Working Group in July 2 002.  At the time, a presentation by the Asian 
Development Bank had drawn significant interest from emerging market economies, in particular 
from those countries which had been affected by th e abrupt interruption of trade credit lines during 
recent financial crises.  Some Members had indicated that this issue was at the heart of the matters 
that the Working Group should be addressing.  So me low-income countries expressed longer-term 
concerns with respect to on-going difficulties to attract  this type of finance, due to low credit ratings, 
debt overhang, and limited access to international financ ial markets.  Of particular interest in the 
Report by the Director-General to the General Council (WT/WGTDF/W/23) was the link made 
between the trade-financing problem and the role of the WTO's Agreements on Trade in Financial 
Services and on Subsidies and Countervailing Measures.  
7. Several Members considered that improving the availability of trade finance was linked with 
WTO disciplines through GATS commitments on trade in  financial services  and liberalization of the 
financial services sector.  Commitments helped WTO Members build more modern and efficient 
financial services markets, with higher standards of management and regulation, which would be 
more resilient in times of crises.  Wider GATS commitm ents not directly linked to this particular area 
of finance would also help to encourage financial institutions to remain engaged in local markets, 
thereby fostering stronger markets with enhanced liquidity.  There were differing views on whether a 
large number of operators in a market exacer bated or mitigated herd behaviour.   
8. In the view of some Members, GATS commitments per se  were not the main determinant for 
increased trade financing.  For example, the leve l of GATS commitments did not truly represent the 
level of local competition in countries.  Also, expe rience with liberalization confirmed the importance 
of the right sequencing of measures.  Nor was it clear that GATS commitments in times of crises were sufficient to maintain adequate  lines of credit for trade.    WT/WGTDF/W/34/Rev.1 
 Page 3 
 
 
 9. Some Members considered that in the long run fi nancial services liberalization contributed to 
stronger financial stability and improved access to cr edit.  Strong regulatory frameworks, including 
prudential rules and anti-competitive practices, were  pre-conditions for successful liberalization of 
financial services.  It was important that count ries had in place sound prudential regulatory systems 
operating in a non-discriminatory manner in order to support market access for foreign suppliers. 
10. Members also addressed the issue of trade fi nancing as it relates to the WTO Agreement on 
Subsidies and Countervailing Measures.  It was widely felt that trade financing for imports, as long as it was not contingent on export performance, would not  be subject to the disciplines of the Subsidies 
Agreement.  Similarly, development financing provided by multilateral development institutions 
would be outside the scope of the Agreement.   
11. Another Member considered that schemes deali ng with the financing of essential imports of 
inputs would be compatible with the Agreement, in th at they would not be explicitly export subsidies.  
It was noted that export credit agencies, for the most part, provided services to promote exports from their own countries.  If these services were not ba sed on commercial terms or internationally-agreed 
terms (such as the OECD arrangement), they coul d potentially have trade-distorting effects.  A 
question was raised as to whether trade financing prov ided by national authorities at pre-crisis interest 
rate level during times of crisis would also be excluded from the disciplines of the Agreement, as 
crisis-level interest rates could ha rdly be regarded as market-based.  
12. The view was expressed that in times of crisis private banks would benefit from more secure 
guarantees provided by governments, and certain mu ltilateral initiatives would be needed in support 
of efforts by national authorities.  Some Members cons idered that the issue of the availability of trade 
financing was not only relevant in periods of crises  but also in the normal course of trade, as many 
developing countries experienced difficulties in obtaining trade financing routinely at an affordable cost;  as such, multilateral solutions to improve acc ess to trade financing more generally were also 
important. 
13. One Member suggested the relevant agencies could provide  regular updates of progress made 
in improving the availability of trade finance around the world. 
C. T
RADE AND FINANCIAL MARKETS / WTO  RULES AND FINANCIAL STABILITY  
14. At its meeting on 4 October 2004, the Working Group discussed the topic of trade and 
financial markets.  Discussion focused on two s ub-themes, namely (i) recent progress in achieving 
international financial stability, and its relationship w ith trade;  and (ii) exchange rate volatility and its 
impact on trade flows.3   
15. The Secretary-General of the Financial Stab ility Forum (FSF) informed the Working Group 
about the work of the FSF.  He considered that im provements in transparency, and the balance sheets 
of central banks, through countries' adoption of  the IMF's Special Data Dissemination Service 
(SDDS), Financial Sector Assessment Programs (F SAPs) and Reports on the Observance of Standards 
and Codes (ROSCs) had enhanced financial stability.  Risk management had been enhanced through 
both technology and improvements in risk mana gement practices, and efforts to structure 
indebtedness had reduced borrowing, thus adding resilience to financial systems.  Improvements in 
risk management had been made both through the wo rk of international organizations and at the 
national level, where more attention was now being paid to the timing and sequencing of 
liberalization, exchange rates were being mana ged more flexibly, and reliance on short-term 
borrowing had been reduced.   
                                                      
3 For details see WT/WGTDF/M/7, 7 June 2004. WT/WGTDF/W/34/Rev.1 
Page 4  
 
 16. Some Members expressed a concern about the need to provide an adequate voice to 
developing countries in the design and strengthening of  the financial architecture.  Some noted that 
the adoption of good practices and the development of  standards and codes, and their recognition in 
financial services negotiations, could enhance financ ial stability.  One Member suggested that the 
theme of "WTO rules and financial stability" was relevant in this context. 
17. The IMF presented a study on exchange rate vola tility and trade flows, an update to one that 
had been done in 1984 for the GATT Contracting Parties.  The updated study
4 had found that while 
there was a negative relationship between exchange ra te volatility and trade, the effect was small and 
the relationship not robust.  The study also found th at maintaining a pegged ex change rate regime did 
not reduce susceptibility to exchange rate vola tility.  Members noted that domestic policy and 
structural changes were often a cause of exchange rate volatility. 
D. BETTER COHERENCE IN THE DESIGN AND IMPLEMENTATION OF TRADE -RELATED REFORMS 
AND MONITORING  
18. At the meeting of the Working Group in Oc tober 2004, it was agreed that the Director-
General, in his remarks to the General Council on Coherence on 22 October 2004, should be invited 
to make reference to the technical work of the Wo rking Group, much of which was relevant to the 
Coherence mandate.  The Director-General's call for work in the WGTDF at a more technical level on 
coherence was well-received by the General Council.5   
19. Coherence was the main topic of the age nda for the meeting of the Working Group on 
10 December 2004.6  At the request of some Members, who felt that the theme had not been 
exhausted, the theme remained on the ag enda for the next two meetings as well.7  In response to a 
request from Members, a representative of UNCTAD was invited to present the Trade and 
Development Report (TDR) 2004  on "Policy coherence, developmen t strategies and integration into 
the world economy".  A representative of the World Bank was also invited to brief the Group on the Bank's work on supply-side constraints.   
20. The representative of UNCTAD based his presentation on a background document 
"Economic Policy Challenges in an Open Econom y:  Coherence Between Trade and Finance".
8  He 
remarked that the reason the TDR had addressed the issue of coherence was because fundamental 
changes in the global financial system had an im pact on the trading system.  He began with the 
premise that the exchange rate was fundamental for determining competitiveness, but was influenced 
by financial flows, which he saw as an incoheren ce between trade and finance.  While there was an 
international trading system, there was no multilateral financial system.  Furthermore, he considered 
that it was the level of exchange rates, much more  than volatility, which impacted trade flows, an 
issue central to the WTO.  He stated that moneta ry union had a positive effect on trade and developing 
countries were trying to exploit that option.  In his view, it was not enough to reform or to reduce 
protection or to improve supply side capacity.  A countr y also needed the right exchange rate system.   
21. Some Members welcomed the contribution as it stimulated a lively discussion and they 
appreciated its alternative approach to coherence.   Some Members questioned the details, viability or 
value of a global financial system based on fixe d exchange rates, which would require capital 
controls.  One view was that international adju stment should not replace individual balance of 
                                                      
4 WT/WGTDF/W/24, and IMF Occasional Paper No. 235. 
5 WT/WGTDF/M/10, para. 3. 
6 WTO/AIR/2456;  The topic of coherence had been discussed before the Fifth Session of the 
Ministerial Conference (see WT/WGTDF/W/8 and WT/WGTDF/W/17).   
7 WT/WGTDF/M/9;  M/10, para. 3;  and M/11.   
8 WT/WGTDF/W/27.    WT/WGTDF/W/34/Rev.1 
 Page 5 
 
 
 payments adjustment; another questioned the contri bution that could be made by the WTO.  Some 
Members pointed out that the choice of an exchange rate regime was a sovereign issue; others noted 
that exchange rate adjustment was importa nt for enhancing export competitiveness in many 
developing countries.   
22. The representative of the World Bank briefed the Group on the efforts underway on the part 
of the Bank to address trade reform, including the a lleviation of supply-side constraints.  Members 
welcomed the Bank's increasing involvement in trad e issues, especially as concerned the Integrated 
Framework.  There was a general recognition that count ries needed to integrate trade issues into their 
poverty reduction and development strategies;  as such  Trade Ministries should influence this agenda 
or the Bretton Woods institutions would be limited w ith respect to their ability to respond to country 
needs.  The view was expressed that trade stra tegies had to complement general programmes of 
economic reform, related to inter alia , regulatory environment, investment climate, transport and 
customs.  Some Members highlighted the potential for huge gains in revenues from improving customs efficiency.  It was noted that policy coor dination at the national level, in particular the 
inclusion of trade reforms, supported by techni cal assistance and capacity building, in countries' 
development strategies had worked well in the Po verty Reduction Strategy Process.  One Member 
pointed to the need for an institutional structure to  ensure coherence for development in relation to 
Part IV of the GATT.   
E. T
HE INTER LINKAGES BETWEEN EXTERNAL LIBERALIZATION AND INTERNAL REFORMS  
23. This theme was examined at the meetings of the Working Group on 18 April and 4 July 
2005.9  Several Members agreed with observations made in the Secretariat's background document10, 
inter alia , trade liberalization stimulates growth if accompanied by policies designed to improve the 
investment climate, external liberalization can act as a catalyst for internal reform, and the importance 
of efficient infrastructure and lower transport costs.   One Member suggested that the kind and pace of 
liberalization should take into account the different  realities of developing and developed countries. 
Another Member pointed out that in order for deve loping countries to benefit from the trading system, 
supply-side constraints including structural adju stment should be tackled holistically. The Doha 
Round Initiative of the World Bank and the Trade Integration Mechanism (TIM) of the IMF were 
important new mechanisms for providing temporary adjustment assistance.   
F. TRADE LIBERALIZATION AS A SOURCE OF GROWTH ;  THE IMPORTANCE OF MARKET ACCESS 
AND THE REDUCTION OF OTHER TRADE BARRIERS IN THE DOHA DEVELOPMENT AGENDA 'S 
NEGOTIATIONS ; EXTERNAL FINANCING , COMMODITY MARKETS AND EXPORT 
DIVERSIFICATION  
24. The three remaining themes were taken up at  the meeting of the Working Group on 4 July 
2005.11  Under the theme of trade liberalization as a source of growth, Members echoed similar points 
made with regard to coherence;  e.g., in order for trade policies to boost economic growth over the 
long term they must be accompanied by domestic policy reforms.  Trade liberalization did not 
translate automatically into growth, but needed  to be accompanied by appropriate policies to 
guarantee a supportive investment climate so that fo reign investment could occur, a form of finance 
less costly than debt.  Some Members expressed a wish for more in-depth discussion on the  issue of 
sequencing and timing of reform, if so agreed. 
 
                                                      
9 WT/WGTDF/M/10 and WT/WGTDF/M/11. 
10 WT/WGTDF/W/29.   
11 WT/WGTDF/M/11 and WT/WGTDF/W/31.   WT/WGTDF/W/34/Rev.1 
Page 6  
 
 25. Under the theme the importance of market access and the reduction of ot her trade barriers in 
the DDA negotiations,  it was mentioned that the subject of market access  brought up an important 
point under coherence: if markets abroad were closed then liberalizing at home or ensuring 
infrastructure capabilities was only one side of the equa tion.  It was noted that the lowering of tariffs 
on higher value added products woul d help to alleviate the debt problems of commodity exporters. 
Some Members considered more information on Sout h-South trade would be valuable as would more 
discussion on services trade, especially with regard to mode 4.   
26. Under the theme external financing, commodity markets and export diversification, while it 
was understood that many poor countries depended on commodities and that a resolution to the 
commodity problem could aid in poverty reduction, it was also pointed out that the topic of declining 
terms of trade for commodities was being addressed  in the Committee on Trade and Development as 
well as at UNCTAD.   
G. C
OMMUNICATIONS FROM MEMBERS  
27. In 2005, the Working Group received four communications from Members. 
(WT/WGTDF/W/30, 32, 33 and 35) (see Annex).   
28. At the meeting of 18 April, the representative of Benin, on behalf of the ACP Group, 
introduced a communication.12 He emphasized that the linkage between trade, debt and finance was 
fundamental and it was important that the correla tion between these three subjects be examined in 
depth.  He pointed out that due to a number of factors, including declining commodity markets and 
market access barriers, developing and least-d eveloped countries were prevented from benefiting 
from international trade and were caught in a vici ous cycle of debt.  The ACP Group was suggesting 
that the Group recommend to the General Council that  a Committee on Trade, Debt and Finance, as 
outlined in paragraph 5, be esta blished. He expressed the view that, if the Group were to give 
consideration to the recommendations contained in th e submission, he was convinced that this would 
enable developing and least-devel oped countries to improve their par ticipation in international trade 
helping to ensure their development and fight against poverty.  
29. One Member believed that the submission contained elements which called for discussion and 
commentary.  He appreciated the perspective take n in the communication which tried to situate the 
trade, debt and finance linkages in a more globa l context as spelled out in paragraph 2 of the 
document, referring to issues which needed to be an alyzed in due course and  he believed there could 
be a focused debate on this document with a view  towards possible recommendations to the General 
Council.  Another Member wished to support Beni n and the ACP Group in their submission and drew 
attention to paragraph 5(g) whic h contained some very useful and specific ideas on how to address 
concerns not only in the Working Group but also elsew here in the WTO.  He suggested that trading 
partners might wish to look at this document critically  and that it could serve as a very strong basis for 
the preparation of the Report to the General Council.  
30. Subsequently, at the meeting of 4 July, the repr esentative of Benin, speaking on behalf of the 
ACP Group, said that the Group's most recent comm unication had been intended to complement and 
strengthen the original submission.13  There was a need for the WTO to become more involved than in 
the past in helping to solve problems in developing countries, in particular with regard to those linked 
to the burden of debt which negated the efforts being made to achieve development goals.  The 
complexity of the problem of debt was such that it  could only be dealt with effectively if this was 
done in an integrated and global manner.  For the multilateral trading system to contribute effectively 
to the development of Third World countries it w as imperative that those countries emerged from the 
                                                      
12 WT/WGTDF/W/30. 
13 WT/WGTDF/W/32.  WT/WGTDF/W/34/Rev.1 
 Page 7 
 
 
 cycle of debt and were given the possibility to use their export earnings not to pay off debt but rather 
to invest in wealth and employment.  In this re gard, the role of the multilateral trading system was 
vital because of the real contribution it could ma ke towards solving problems linked to the drop in 
export earnings and with respect to the mechanis ms of coherence between trade, finance and 
development.  The Group noted and welcomed the conclusions of G8 Finance Ministers at their recent 
meeting in London in which it had been proposed that  the process of debt cancellation with respect to 
IMF, World Bank and African Development Bank loans be completed for certain developing 
countries. 
31. In the interests of institutional strengthening of the work program on trade, debt and finance, 
the ACP Group invited Members to agree on the esta blishment of a regular Committee on trade, debt 
and finance.  Whilst awaiting the establishment of such a Committee, specific recommendations for 
action should be addressed to the Genera l Council for adoption.  These included, inter alia , the 
following:  (a) recommendations to the relevant institutions to encourage the immediate and full 
cancellation of debt of developing countries suffering consequences of unfavourable terms of trade;  
(b) recommendation that developed countries cancel b ilateral debts including export credits of  those 
developing countries that are suffering from a drop in their share of international trade because of, 
inter alia , subsidies by developed countries and dramatic  fall in prices of primary commodities;  (c) 
recommendations of appropriate measures that coul d help increase exports, notably through durable 
technical and financial assistance to alleviate th e drastic fall and volatility of export earnings;  (d) 
recommendation to exempt developing countries from undertaking additional measures to liberalize in 
sectors that are sensitive or important to their de velopment needs;  (e) recommendation to set up a 
mechanism to review debt from the point of view of  trade.  Such a mechanism would make it possible 
for the General Council to adopt recommendations on actions to be taken, and provide developing 
countries with temporary and non-reciprocal concessi ons, the goal being to generate an increase in 
developing-country exports as well as allowing th em to diversify their export base and increase 
competitiveness;  and (f) recommendation to allo w developing countries to make use of an 
accelerated procedure to take preventive or correctiv e measures to deal with financial crises within 
appropriate deadlines. Should it not be possible to put these measures into practice before the 
establishment of a regular Committee on trade, debt a nd finance, the ACP Group considered that they 
should be automatically included in the remit of  such a Committee.  The ACP Group counted on 
Members' cooperation for a constructive exchange of  views so that progress could be made in this 
area and a consensus achieved acceptable to all.      
32. One Member expressed some concern that the submission blended process and substance and  
followed up with a number of questions regarding the proposal: first, what relationship there was 
between this Group and other bodies, something that should be considered very carefully.  He also 
commented that debt cancellation, reduction and relief was not an area  where a trade negotiator  could 
take decisions.  With respect to paragraph 6(d), he  considered that this issue of an exception for 
developing countries not being re quired to undertake commitments in sectors relevant to their 
development needs exceeded the scope of the Working Group. With respect to subparagraph 6(e), 
which proposed a trade-related debt review, he questioned as to what ty pe of debt would be relevant 
to trade.  With regard to sub-paragraph (f) wh ich proposed a fast-track procedure to undertake 
preventive or remedial measures ag ainst financial crises, he wondered what was not working in the 
existing system. He pointed to the existence of th e prudential carve-out in the area of financial 
services and the balance-of-payments provisions in both the GATT and the GATS and thought it 
would be useful if the proponents could give more explanation of the specific problems in the existing 
system. 
  WT/WGTDF/W/34/Rev.1 
Page 8  
 
 33. Another Member considered that one of the recommendations to the General Council should 
be a conclusion that arose naturally from the issues that had been examined and it was possible that 
this could point to the establishment of an institu tional mechanism to examin e these issues further.  
His delegation firmly supported the approach ta ken in the proposals submitted by the ACP Group on 
debt.  He emphasized that debt was a core problem and the task of the Working Group was to identify 
how the WTO could contribute to help developing c ountries with high foreign debt to overcome this 
problem, i.e., whether the current WTO rules contai ned the tools to help countries overcome problems 
caused by external debt.  He noted that the only measures that could be taken under WTO rules under the balance-of-payments provisions were import re strictions. These could have a harmful impact, 
whereas increasing exports was necess ary to ensure income and financ ial stability were maintained.  
In his view, the provisions of the WTO agreemen ts could be reviewed to develop the necessary 
instruments so that countries with high foreign de bt or balance-of-payments problems would be able 
to increase their exports of goods and services and to  diversify into higher value added products;  
particularly given that subsidiza tion by developed countries aggravat ed the situation. One option was 
to establish a cooperation mechanism for developing countries that should include an improvement in 
market access for countries that were facing critical  periods. Developing countri es should, in addition, 
be able to make use of different measures in or der to promote exports, wh ile moderation should be 
exercised in terms of legal obligations.  In his view , there was a gap in the rules of the WTO to help 
countries that were facing high debt and balance-of-payments crises.  
14 
34. Another Member welcomed the revised proposal from the ACP Group and said her 
Government  understood  the underlying concerns.  The problems faced by developing countries were 
multiple and required comprehensive solutions in cluding sound domestic policies.  The WTO was 
well placed to contribute to raising growth throug h its rules and tariff negotiations and this was its 
main contribution.  At the same time, she drew th e attention of the Group to the work being carried 
out under the Coherence mandate and the need to  strengthen this work.  She said her delegation 
remained open to expanding the Working Group into  a standing Committee but considerable work 
still needed to be done to ensure that the mandate  remained within the remit of the WTO and that 
overlaps were avoided. 
35. Another Member noted that the paper ignored the role of Member countries’ macroeconomic 
and structural polices that were so often the sour ce of problems. Foreign borrowing contributed more 
to growth when domestic resource allocation mech anisms channelled such funds toward areas of 
highest return, usually under competitive market cond itions.  Service of the foreign debt incurred was 
less likely to raise problems when the investment funded by the debt resulted in a competitive and 
productive addition to domestic output potential.  Wh en debt was thus incurred to such good national 
purpose, a cause of international financial dist urbance was lessened and significant balance-of-
payments adjustment processes, when necessary, were facilitated. Trade liberalization by all 
Members, supported by sound domestic economic policies, could contribute to the healthy allocation 
of investment made possible by foreign capital, and lessen problems associated with debt service and 
balance-of-payments adjustment.  For any indivi dual developing-country Member, the relevant 
salutary trade liberalization was by the Member itself, as well as by its trade partners, in developing and high-income group of countries alike.  The communication, however, emphasized how trade and trade policy had purportedly worsened the situation of developing countries as a group with respect to economic development, and the management of fo reign and international financial issues.  The 
narrowness of the scope of the paper excluded the role of domestic policy distortions and import 
restrictions among developing countri es in understanding the nature of such developmental, debt and 
financial problems.   It was significant to note in this regard that some 70 per cent of the tariff duties imposed on developing-country exports were imposed by other developing countries.  She went on to 
say that, in its terms of reference, the ACP comm unication presented a list of issues that were already 
appropriately covered in other ne gotiating groups (e.g., balance-of-p ayments restrictions), by the 
                                                     
 
14 See WT/WGTDF/W/33.  WT/WGTDF/W/34/Rev.1 
 Page 9 
 
 
 Committee on Trade and Development (CTD), or were  not in the purview of the WTO (e.g., exchange 
rates and debt issues).   The ACP terms of refere nce for the contemplated Committee on trade, debt 
and finance touched on the following topics: bala nce-of-payment, debt issues; exchange rate 
volatility; commodity diversification and pricing; capital accounts and exchange rate liberalization; 
technical assistance;  market access, tariff escala tion, preference schemes; forgiveness and reduction 
of foreign debt; coherence and sequencing of development-orie nted policies, including trade 
liberalization;  and TPRM review of developed c ountries' policies on development assistance and debt 
reduction. The proposal for a new Committee on trade, debt and finance appeared, in the view of her 
delegation, to coincide with  the mandate of the Committee on Trade and Development.  The CTD 
was the forum for discussion of all cross-cutting matters  of special interest to developing countries, in 
particular those that had been identified in the term s of reference cited in the ACP paper.  It also 
served as a focal point for consideration and coordination of technical assistance work on 
development in the WTO and its relationship to development-related activities in other multilateral 
agencies.  Further obviating the need for the estab lishment of a Committee on trade, debt and finance 
in her view, but more importantly adding support to  her feeling of the outcome of the discussions to 
date in the Working Group, and in light of the proposal tabled by the ACP Group and the overlaps in 
the discussions of the last two years, her delega tion felt that the recommendation to the General 
Council be to subsume this Working Group under the Committee on Trade and Development.  
36. She continued that, with regard to WT/WGTDF/W/32, this communication addressed 
outstanding debt of developing countries with in ternational financial institutions and individual 
governments.  Her Government believed that certain of its instructions were outside the competence 
of the WTO and the mandate of the Working Group,  and therefore could not agree to these proposals. 
 In the context of the coherence initiative, th e IMF and World Bank, had undertaken a number of 
initiatives, such as providing advice and assistance for those willing to undertake tax and trade reform 
efforts in the context of sound economic programmes.   The IMF had opened, or would open, regional 
centres in the ACP region. The World Bank offere d programmes to provide substantial financial 
support for tax reform in those countries that asked for such help.  For example, structural lending by 
the Bank could provide a bridge, while the borrowe r reformed its tax policies and improved its tax 
administration, and the Bank had consistently fo und that the economic/financial return on these 
operations easily offset the costs of the loans. 
37. One Member supported  the  suggestion that  the  WTO could design more instruments to 
help developing countries alleviate th eir debt burden.  He also agreed that the Working Group should 
avoid duplication with other bodies and that recomme ndations be made in c oherence with other WTO 
bodies and international organizations.  
III. CONCLUSIONS 
38. Members recommend that the Working Group con tinue the examination of the relationship 
between trade, debt and finance, and of any possi ble 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 pr oblem of external indebtedness of developing and 
least-developed countries, and to strengthen the c oherence of international trade and financial 
policies, with a view to safeguarding the multilatera l trading system from the effects of financial and 
monetary instability. 
_______________ 
 
 WT/WGTDF/W/34/Rev.1 
Page 10  
 
 ANNEX 
 
Summary of contributions received in the Working Group  
on Trade, Debt and Finance  
(July 2003 – October  2005)  
Symbol 
(WT/WGTDF/W/-) Member / Other 
source Where introduced 
(Reference in Minutes) Title or Topic 
W/21 Secretariat M/5, Para. 42 Draft Report to the General Council 
W/21/Rev.1 Secretariat M/5, Para. 42 Draft Report to the General Council – 
Revision 
W/22 Secretariat M/7, Para. 3 Expert Group Meeting on Trade 
Financing 
W/23 Secretariat M/7, Para. 3 Improving the Availability of Trade 
Financing:  Report of Preliminary Work 
W/24 IMF M/7, Para. 39 Exchange Rate Volatility and Trade 
Flows – Some New Evidence 
W/25 Secretariat M/7, Para. 39 Draft Work Programme for Meetings 
in 2004 
W/26 Secretariat M/8, Para. 3 Financial Stability Forum:  Fact Sheet 
W/27 UNCTAD M/9, Para. 3 Communication from UNCTAD – 
Economic Policy Challenges in an 
Open Economy:  Coherence Between Trade and Finance 
W/28 Secretariat [M/9, Para. 45] Draf t – Report (2004) of the Working 
Group on Trade, Debt and Finance to 
the General Council 
W/29 Secretariat M/10, Para. 6 Inter-linkages Between External 
Liberalization and Internal Reform 
 
W/30 and Corr.1 ACP M/10, Para. 13 
M/11, Para. 27 
 ACP Submission to the WGTDF 
W/31 Secretariat M/11, Para. 8 Tr ade Liberalization as a Source of 
Growth;  The Importance of Market 
Access and the Reduction of Other Trade Barriers in the DDA 
Negotiations;  External Financing, 
Commodity Markets and Export 
Diversification 
W/32 ACP  M/11, Para. 11 ACP Submission to the WGTDF:  
Specific Actions to Address Key Issues of Concern for Developing Countries 
W/33 Argentina M/11, Para. 30 Relationship between Trade, Debt and 
Finance – Statement made at the 
Group's meeting on 4 July 2005  WT/WGTDF/W/34/Rev.1 
 Page 11 
 
 
 Symbol 
(WT/WGTDF/W/-) Member / Other 
source Where introduced 
(Reference in Minutes) Title or Topic 
W/35 Mauritius on behalf 
of the ACP Group  Submission to the WGTDF 
__________