Maldives WT/TPR/S/221 
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V. INTEGRATED FRAMEWORK, AID FOR TRADE, AND TRADE-RELATED 
TECHNICAL ASSISTANCE 
(1) OVERVIEW  
1. As an LDC, the Maldives continues to rely  on technical assistance and other forms of 
assistance provided by development partners for its efforts to integrate into the multilateral trading 
system.  As it is undertaking wide-ranging economi c reforms, the Maldives requires assistance in 
various areas.  One of its most urgent needs rela tes to its expected graduation from LDC status in 
2011, which has implications for the preferential ma rket access, commitments in the WTO, and level 
of ODA and technical assistance it currently receives.   Consultations are under way with development 
partners to ensure a smooth transition.   
2. In the area of broader trade reform, given th e Maldives' high reliance on tariffs for its tax 
revenue, the priority is tax reform, which requires the introduction of a broa d-base taxation system.  
As for trade policy formulation and implementation, there is a need to strengthen the collection of 
data so that the Government can analyse and evaluate the effectiveness of different policy 
instruments.  For trade-related technical assistan ce, where the WTO Secretar iat has been the major 
provider, the Maldives should benefit further fro m workshops on general understanding of the WTO 
as well as on specific issues of direct interest.  However, even if WTO-consistent legislation is implemented, its enforcement could only be realized if it is accompanied by additional measures, such 
as upgrading the institutional and human cap acity at implementing agencies.   
3. The Maldives has benefited from the Integrated  Framework (IF), which has helped it to 
mainstream its trade agenda into national developm ent strategies.  With the assistance of development 
partners involved in the IF, the Government prep ared a diagnostic trade integration study (DTIS), 
which outlined a set of recommendations for polic y reforms and technical assistance needed to 
overcome the country's impediments to trade development.  Another key outcome of the IF is the 
establishment of its first national trade policy coor dinating committee, whose objective is to promote 
a coherent approach to trade-policy formulation and implementation.  The Government is also keen to 
use the IF process to develop its Aid-for-Trade st rategy, with a view to generating greater support 
from development partners to meet its trade and de velopment needs.  However, the Maldives has only 
a small pool of donors providing trade-related assi stance with little coordination among themselves or 
with the Government. 
(2) T
RADE -RELATED TECHNICAL ASSISTANCE  
(i) Technical assistance provided since the last Review 
4. The WTO Secretariat is the largest provider of  trade-related technical assistance and capacity 
building activities to the Maldives.  According to  the Doha Development Agenda Trade Capacity 
Building Database, the WTO Secret ariat delivered over 80% of the 117 entries inscribed for the 
Maldives as a beneficiary of the technical assi stance activities provide d between 2003 and 2007.1  
Other providers included:  the Asian Developm ent Bank (trade-related training), ESCAP (trade-
related training, RTAs);  IMF (tariff reforms), Islamic Development Bank (IPRs), UNIDO (TBT), and Japan (customs valuation and trade facilitation).   
5. Since its last Trade Policy Review in 2003, the Maldives has participated in a wide range of 
technical-assistance activities organized by the Secr etariat.  Five national activities were organized 
during the review period, including on services (2003), TRIPS and SPS (2004), customs valuation 
                                                     
 
1 WTO online information.  View ed at:  http://tcbdb.wto.org. WT/TPR/S/221 Trade Policy Review 
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(2005 and 20072), and upgrading of the WTO Reference Ce ntre (2004).  No technical-assistance 
activities have been requested since 2006.  Nonethel ess, the Maldives has taken part in a number of 
regional workshops and seminars on a wide range of WTO topics.  Moreover, Maldives' officials have 
regularly attended various Geneva-based training courses, including three-month trade-policy courses, 
introduction courses for LDCs, and specialized traini ng courses on DSB.  More recently, the Maldives 
has also participated in e-training sessions covering various WTO topics.  
6. Since the Maldives did not have representa tion to the WTO until 2008, it regularly 
participated in Geneva Week, a biannual, week-l ong activity aimed at informing non-resident WTO 
members and observers of the state of play in the DDA negotiations and other WTO activities.  In 
addition, WTO-sponsored Geneva-based activities in areas such as services, trade facilitation, and 
TBT, have helped the Maldives to participate in WTO regular meetings.  
(ii) Graduation from LDC status   
7. One of the Maldives' most i mmediate needs arises from its graduation from LDC status, 
which will occur in January 2011;  ensuring its smooth transition into  a developing country has been 
its priority.3  Graduation will have implications for pref erential market access,  commitments in the 
WTO, and the level of ODA and technical assistan ce, which the Maldives cu rrently receives as an 
LDC (Chapter 2(5)(iv)).  In accordance with the United Nations General Assembly resolution 59/209, 
the Maldives has been consulting trade and develo pment partners on various elements that would 
ensure a smooth transition, including at the Maldives Partnership Forum (section (4)(iii)).4  A n  
inter-ministerial Working Group on Smooth Transi tion from LDC Status was established in 2009 
under the leadership of the Ministry of Foreign Affairs.      
8. In the area of non-reciprocal preferential market access, the Maldives' major concern 
associated with graduation is the loss of duty-free ma rket access for its tuna ex ports to the EC market, 
where it enjoys a preference margin of 24% under the EBA.  The EC, sympat hetic to the Maldives' 
concerns, has agreed to provide the EBA benefits fo r an additional period of three years from the date 
of graduation or until 2014.  In the meantime, the Ma ldives has started to ratify relevant international 
conventions, whose implementation is  required in order for it to be eligible for the EC's Special 
Incentive Arrangement for Sustainable Develo pment and Good Governance, known as GSP Plus, 
from 2014.  According to the authorities, the Maldives has ratified all but one of the 27 required conventions, and the ratification of the last one, th e Convention on International Trade in Endangered 
Species of Wild Fauna and Flora, is expected in 2010.  With respect to its tuna exports to Japan, 
where an applied MFN tariff rate of 3.5% will be im posed after graduation, the Government is yet to 
start consultations. 
9. Graduation will have implications for the Ma ldives' obligations with respect to the 
implementation of certain provisions of the WTO Agreements as well as its commitments arising 
from the DDA negotiations.  The Ma ldives needs technical assistance in  order to understand the full 
implications and to identify areas in which it may requi re additional time to assume its obligations as 
                                                     
 
2 The 2007 seminar on customs valuation was a regional event hosted by the Government of the 
Maldives and attended by many customs officials.   
3 On 20 December 2004, the United Nations General Assembly initially took note of the 
recommendation that the Maldives be graduated from the list of LDCs, taking into account Resolution 59/209, 
which provides a three-year transition period before gr aduation takes effect.  However, following the tsunami of 
26 December 2004, the General Assembly decided to defer, for a period of three years, the commencement of 
the three-year smooth transition period .  Graduation will thus become effective from 1 January 2011.  Until that 
time, the Maldives remains on the list of LDCs and retains the advantages associated with the LDC status.    
4 Ministry of Foreign Affairs (2009). Maldives WT/TPR/S/221 
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a developing country member from January 2011 .  For instance, with respect to the TRIPS 
Agreement, the Maldives will no longer be eligible for the transition period granted to LDCs, and is 
expected to implement the agreement from the da te of graduation;  however, TRIPS-compliant 
legislation is not expected to be put in place before 2013 (Chapter III(4)(vii)).5  Similarly, graduation 
will change the level of commitments that the Ma ldives will have to undertake, and the range of 
special and differential provisions to  which it will have access, in the areas of market access and rules, 
arising from the conclusion of the DDA negotiations .  The Maldives is exploring how it can be 
engaged in the negotiations as a small and vulnerable economy after graduation, and secure relevant 
benefits. 
10. In the area of ODA, while there is generally  no explicit reference to LDC status in 
development financing schemes, the Maldives is concerned about a possible decrease in 
concessionary treatment in bilateral allocations, w ith a lower grant element and a possible fall in 
overall allocations.  As for trade-related technical assistance, the WTO Secretariat Technical Assistance Plans make reference to LDCs' entitl ement to three national activities, while only 
two activities are foreseen for other developing countr ies.  In the Integrated Framework, discussions 
are under way in the IF Board on the treatment of gra duating LDCs, in particular, with respect to their 
eligibility for the EIF Trust Fund after graduation.   
(iii) Trade-related technical assistance needs 
11. As the Maldives is undertaking wide-ranging economic reforms, it requires technical 
assistance in various areas.  With regard to trade re form, given the Maldives' heavy reliance on tariffs 
as the main source for tax revenue, it needs technical  assistance for the introduction of a broad-based 
taxation system, which is expected to start w ith the introduction of a business-profit tax and an 
ad valorem  tourism tax in the short term, followed by  a goods and services tax and a personal income 
tax in the medium term.  This tax reform would allow the Maldives to undert ake much needed tariff 
reform, paving the way for it to use the tariff less as a source of revenue and more as a trade policy instrument where necessary.  The IMF has b een assisting the Maldives in developing new tax 
legislation.  However, even if the legislation is put in place, the challenge will be to implement and 
administer a comprehensive internal tax system;  this would require stre ngthened institutional and 
human capacity in the Department of Internal Revenue.  
12. In the area of trade policy formulation and implementation, the Maldives needs technical 
assistance to improve the collection of statistics, which would allow the authorities to formulate and 
evaluate their policies so that th ey can address the needs of the trad e community.  Currently, there are 
large gaps in the data collection on essential econo mic activities, such as business activities (including 
corporate employment, income, and profits), FDI fl ows, and household income.  The lack of these 
data also hinders the introduction of the domestic tax system, which requires identification of the 
taxpayer population.  Similarly, without the data on household income, it would be difficult to reform 
the public utility tariffs (such as electricity and wate r), so as to take into account the ability of the 
disadvantaged population's to pay for them (Chapter IV(4)). 
13. With respect to WTO technical assistance, ther e is a general need for knowledge building on 
the WTO Agreements and the DDA negotiations.  The n eed is particularly high among officials in the 
line ministries, whose understanding a nd engagement is key to the Mald ives' ability to derive benefits 
from its participation in the multilateral trading sy stem.  In addition, the Maldives may benefit from 
workshops or seminars on specific topics that are of more direct interest, such as geographical 
                                                     
 
5 The TRIPS Council Decision of 29 November 2005, contained in WTO document IP/C/40, extends 
the transition period for LDCs to 1 July 2013 for the implementation of the TRIPS Agreement. WT/TPR/S/221 Trade Policy Review 
Page 48 
 
 
indications and fishery subsidies.  It may also wish to request assistance from the Secretariat on 
notifications, since few notifications ha ve been submitted to the WTO.   
14. While WTO-compatible legislation is expected to be passed by Parliament in various areas, 
the enforcement of new as well as existing legi slation requires an upgrade of the human and 
institutional capacity, especially training of official s.  For instance, in order to implement the WTO 
Agreement on Customs Valuation customs staff, impor ters, and clearing agents will require technical 
training on valuation methods, and changes are need ed in customs clearance  procedures.  These 
changes will require the establishment of a post- clearance audit unit, which will need specialist 
training, and the upgrading of computer support to aid the risk-based selectivity.  For the 
implementation of the TRIPS Agreement, the Inte llectual Property Office in the Ministry of 
Economic Development, established onl y in 2007, requires more capacity and training for its staff;  
this is essential for establishing an IPR regime in the country. 
(3) INTEGRATED FRAMEWORK AND AID FOR TRADE  
(i) Integrated Framework 
15. As an LDC, the Maldives has been a benefici ary of the IF since 2004.  A Diagnostic Trade 
Integration Study (DTIS) was prepared in 2005-06, under the leadership of the Ministry of Economic 
Development (MED) and with the assistance of the United Nations Development Programme (UNDP).  The DTIS provides detailed analysis on trade issues of interest to the country, and develops 
an Action Matrix, which contains a set of policy re commendations and technical assistance needs.  In 
the case of the Maldives, the study covered seven broad areas and identified a total of 78 specific 
actions, which are contained in the Action Matrix.  The largest number of recommended actions is in 
the area of customs services and transport in frastructure (18 actions), followed by business 
environment and private-sector development (14 actions );  trade policy and institutions (9 actions);  
macroeconomic reforms (6 actions);   and mainstreaming and implemen tation (3 actions).  The Action 
Matrix also made sector-specific recommendations on fisheries and tourism, the two most important sectors of the economy, prescribing 20 and 8 actions, respectively.   
16. In the area of customs and transport, the DTIS notes that there are gaps at the technical level 
that hinder optimal use of the technology and IT so ftware systems available to the customs services, 
such as ASYCUDA.  The operational systems and procedures used for cargo control impede the 
movement of goods (see Chapter IV(5)(iv)).  More over, the lack of effective communication and 
coordination among customs services, the tradi ng community, and border institutions (port 
authorities, aviation authorities, coast guard, and pol ice), further affects the efficiency of processes 
relating to the movement of goods.  On the busin ess environment and private-sector development, the 
study notes that the Maldives, as a small island de veloping economy, poses formidable challenges for 
investors and entrepreneurs:  it is difficult to reach local markets due to the exceptionally wide 
dispersion of population;  and the possibilities of  exploiting economies of scale, an important 
determinant of productivity and thus  international competitiveness, ar e seriously limited.  Moreover, 
there are significant gaps in the policy, ins titutional, and legal frameworks to support SMEs, 
especially to engage in value-added activities in  the dominant tourism and fishery sectors, which 
could facilitate intra-sectoral and inter-sectoral li nkages with other sectors in the economy.  The DTIS 
notes the lack of capacity to formulate, negotiate , and implement trade policy, including in the 
Maldives' main export sectors.   
17. The DTIS and its accompanying Action Matr ix was validated by the Government in 
November 2006.  Since then, the recommendations contained in the Action Matrix have been Maldives WT/TPR/S/221 
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incorporated into the Maldives' policy, ins titutional, and government-donor frameworks (see 
section (4)).   
(ii) Aid for Trade 
18. According to the OECD Creditor Reporting System Database, the Maldives received 
trade-related aid flows of US$13.5 million in co mmitments and US$4.6 million in disbursements in 
2007 (up from the 2002 and 2005 averages of US$7.7 million and US$0.3 million, respectively).  
These aid-for-trade figures occupied large shar es of the Maldives' overall ODA, which were 
US$26.9 million in commitments and US$11.6 milli on in disbursements in 2007.  Nearly 
three quarters of the flow of total 2007 aid-fo r-trade commitments were directed to economic 
infrastructure (predominately in transport and stor age);  the remainder went into building productive 
capacity (mainly in agriculture).  
19. According to the authorities, the DTIS and its  accompanying Action Matrix will serve as the 
basis for developing the Maldives' strategy for aid for trade, which is yet to be elaborated.  The 
Maldives responded to the aid for trade questionnair e, a joint OECD/WTO exercise feeding into the 
WTO Second Global Review on Aid for Trade, in July 2009.  In its response, it identified the 
following areas as its aid-for-trade priorities:  trad e policy analysis, negotiatio n and implementation;  
export diversification;  a nd regional integration.   
20. At present, there is no monitoring or evalua tion mechanism to measure the impact or 
effectiveness of trade-related aid programmes.  However, the Government intends to use the IF 
monitoring and evaluation framework to coordina te, monitor, and evaluate the impact and 
effectiveness of funds mobilized under the IF.  More over, the IF framework is expected to be linked 
to the monitoring and evaluation framework that is being developed to monitor the Action Plan for the 
Manifesto.    
(4) MAINSTREAMING TRADE INTO THE NATIONAL DEVELOPMENT FRAMEWORK  
(i) Mainstreaming at the policy level 
21. The Maldives has used the IF process to ma instream its trade agenda into national 
development frameworks.  The findings of the DTIS have been incorporated first into the country's 
Seventh National Development Plan (NDP) for 2006- 2010 and then to the Maldivian Democratic 
Party (MDP) Alliance Manifesto.  The NDP containe d a chapter on trade, entitled "Goal 2:  Enhance 
trade, support businesses and build competitive indus tries", which was one of the twelve goals 
identified in the Plan.  The Plan also incorporat ed the Maldives' broader aid-for-trade agenda in 
"Goa1 3:  Invest in strategic and state of the ar t infrastructure to enable ease of movement, enhanced 
access to services and build competitive advantage", ela borating strategies for transport, civil aviation, 
telecommunications, information communication t echnology, and energy.  Since April 2009, the 
implementation of the NDP has been suspended an d replaced by the MDP Alliance Manifesto as the 
Government's development plan for 2008-2013.  At  present, an Action Plan is being prepared to 
implement the commitments set out in the Manifesto.  According to the authorities, despite the 
suspension of the NDP, its trade agenda and strategy will remain largely unchanged under the 
Manifesto, and the findings of the DTIS will be reflected, as appropriate, into the Action Plan.  
22. The Government also used the IF to formulat e the country's first National Trade Policy in 
2007.  With the stated objectives of promoting econom ic growth through expor t-oriented investment, 
and of sharing the benefits of economic growth mo re evenly across society,  the trade policy focuses 
on eight broad areas:  (i) improved trade-policy coordination;  (ii) provision of a stable and 
transparent policy environment through a streng thened legal and institutional framework;  WT/TPR/S/221 Trade Policy Review 
Page 50 
 
 
(iii) promotion of export development through the removal of administrative bottlenecks in the 
import-export regime;  (iv) support for private enterprises by encouraging entrepreneurial 
development, technology transfer, and innovation;  (v ) promotion of fair competition;  (vi) promotion 
of foreign and domestic investment;  (vii) enha ncement of market acce ss through regional and 
institutional trade agreements;  and (viii) institu tional strengthening of the MED.  The policies and 
actions outlined in the trade policy have been tran slated into workable plans, including the annual 
work plans of the MED.  According to the authoriti es, the implementation of the work plans has so far 
been hindered by budgetary constraints, and the acti ons proposed in the work plans will have to be 
included in aid for trade, including funding available under the IF.  
(ii) Mainstreaming at the institutional level 
23. One of the key outcomes of the IF process in  the Maldives was the establishment of a 
National Trade Policy Committee (NTPC) in 2006, with the objective of promoting a coherent 
approach to trade-policy formulation and implemen tation.  However, the NTPC did not meet often 
due to the on-going political reforms;  it functi oned mainly as an IF steering committee to review and 
approve IF projects.  The NTPC was renamed and reactivated as the National Trade Policy 
Coordinating Committee (NTPCC) in May 2009.   
24. The NTPCC is chaired by the Minister of Ec onomic Development, and comprises permanent 
secretaries of various ministries and a representative of the Maldives National Chamber of Commerce and Industry.  MED provides a secretariat to ser vice the Committee.  The key responsibilities of the 
NTPCC include:  coordinating and monitoring the implementation of the National Trade Policy;  
preparing action plans outlining trade policies th at will be implemented by various government 
departments;  providing advice and guidance on oblig ations under multilateral, regional, and bilateral 
trade agreements;  and prioritizing trade-related t echnical assistance.  The NTPCC meets regularly, at 
least once a month, and reports to the Nationa l Planning Council, which has overall coordination 
responsibility for the national development strate gy.  Sub-committees or working groups may be 
established to handle specific issues.   
25. The NTPCC also serves as the National IF Steering Committee, which approves and 
supervises all IF projects, in accordance with th e guidelines of the Integrated Framework.  The 
Secretariat of the NTPCC, which is supported by th e IF Trust Fund, also serv es as the Focal Point for 
the IF.  
(iii) Mainstreaming at the government-donor partnership level 
26. The Maldives has a small pool of development partners resident in the country, including 
those providing assistance in trade-related areas.  The Maldives Partnership Forum (MPF) provides a 
platform for discussion between the Government and its development partners on key issues, 
priorities, and strategies for national developmen t.  The third MPF was held in March 2009 and 
discussed, among other items, the implications of gra duation from LDC status and privatization.  The 
new External Recourse Coordinating Committee (E RCC), which is replacing the Aid Management 
and Coordination Committee, is responsible for ove rall coordination of ODA, including the mandate 
to identify potential donors.  The ERCC is chaired by  the Vice President, and its membership includes 
representatives from the ministries of Finance, Foreign Affairs, and Economic Development.  According to the authorities, the Maldives r eceived an estimated US$31.2 million in ODA and 
US$44.4 million in Tsunami assistance in 2008.  
27. Under the IF, the European Communities, despite  being non-resident in the Maldives, has 
played the role of donor facilitator;  this has as sisted the Government's efforts to coordinate Maldives WT/TPR/S/221 
 Page 51 
 
 
trade-related technical assistance in response to the needs identified in the DTIS.  The EC has 
incorporated the results of the DTIS into its Country Strategy Paper 2007-13, and has supported the Government through a capacity-building project to develop trade policy and to increase its technical 
expertise to defend its position on WTO negotiations.
6  According to the authorities, the EC's 
assistance has been instrumental in setting up the in stitutional structures for trade-policy coordination 
and identifying the Maldives' inte rests in the services negotiations. 
28. There is no formal mechanism for donors to coordi nate their trade-related assistance, although  
a number of multilateral, regional, and bilateral in stitutions are involved in the delivery of assistance 
to the Maldives.  These include:  FAO (agriculture reform), In ternational Fund for Agricultural 
Development (fisheries and agricultural divers ification), IMF (tax reforms), UNCTAD (LDC 
graduation), UNESCAP (LDC graduation), UNIDO (s tandards, methodology, testing, and quality), 
UNDP, WIPO (IPRs), World Bank, Asian Developm ent Bank (privatization), Islamic Development 
Bank, as well as bilateral donors such  as the EC, China, India, and Jap an.  It has been reported that 
MED has often not been consulted in designing donor projects and deciding on the focus and allocation of funds, which has not helped the Government's on-going efforts to strengthen its 
coordination on trade matters.  According to the au thorities, the reactivated NTPCC is expected to 
play a stronger role in coordinating various donors.   
29. Some of the priority recommendations contained in the Action Matrix have been formulated 
into projects financed through the IF Trust Fund;  these are intended to complement the Government's 
efforts to implement the National Trade Policy and its work plans.  The projects, funded under 
Window II of the Trust Fund, include:  (i) institu tional capacity building for trade (implemented by 
MED);  (ii) establishment of a trade information system (by ITC);  (iii) support to the services negotiations within SAARC and WTO (by MED);  and (iv) support to the customs services to upgrade ASYCUDA (by UNCTAD).  While these projects were approved in 2007, their implementation has been delayed, except for the services project, which is near completion.  The 
services project has commissioned a study to identify the Maldives' offensive and defensive interests 
in the services sector with a view to formulating its strategy for participation in the services 
negotiations in SAARC and the WTO.  Implementation of the three remaining projects is expected to be completed by the end of 2009.  Furthermore, the Government is currently preparing the submission 
of a Tier 1 proposal to the IF Board for fundi ng from the IF Trust Fund to further address its 
immediate capacity-building needs to strengthen the implementation of the DTIS Action Matrix. 
                                                     
 
6 EC Commission (2007).  
 
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