RESTRICTED  WORLD TRADE  
ORGANIZATION  WT/WGTDF/M/13 
15 May 2006 
 
 (06-2348) 
Working Group on Trade, Debt and Finance  
  
 
REPORT OF THE MEETING OF 11 APRIL 2006 
 
1. The thirteenth meeting of the Working Group on Trade, Debt and Finance was held on 
11 April 2006 under the Chairmanship of Ambassador Peter Br ňo (Slovak Republic).  The Working 
Group adopted
 the agenda contained in WTO/AIR/2791.   
Agenda Item A:  Appointment of the Chair 
2. The Working Group agreed on the appointment of Ambassador Peter Br ňo as Chairman.  The 
Chairman  thanked the Members for the confidence placed in  him to chair the Group and, on behalf of 
the Group, expressed appreciation to the outgoi ng Chairman Ambassador Kweronda-Ruhemba 
(Uganda) for his dedicated work over the past year. 
Agenda Item B:  Recent submissions by Members 
3. The Chairman  referred to the recent communication from Argentina (WT/WGTDF/W/33), 
and the communications submitted on behalf of  the ACP Group by Benin (WT/WGTDF/W/30 and 
Corr.1 and W/32) and Mauritius (WT/WGTDF/W/35).  Since these submissions had been made some 
time ago, he suggested that, for the benefit of Memb ers, the proponents re-introduce their proposals.  
4. The representative of Argentina  said that Argentina's proposal in WT/WGTDF/W/33 had 
been circulated as an initiative to  interpret the mandate of the Working Group in paragraph 36 of the 
Doha Ministerial Declaration that the relations hip between trade, debt and finance should be 
examined.  This mandate had been renewed in paragraph 42 of th e Hong Kong Ministerial 
Declaration whereby Ministers agreed that, "...... build ing on the work carried out to date, this work 
shall continue on the basis of the Doha mandate" an d instructed the General Council to report further 
to the next session of the Ministerial Conference.   The renewed mandate provided the Group with a 
framework from a systemic point of view to iden tify instruments within the mandate and competence 
of the WTO that would contribute to a durable solu tion to the problem of external indebtedness of 
developing and least-developed countries.  The WT O agreements currently allowed developing 
countries experiencing difficulties with their extern al financial situation and balance-of-payments 
problems to adopt measures to safegua rd the external financial situation and balance of payments in 
order to ensure a level of reserves adequate fo r the implementation of their economic development 
programmes.  As mentioned in the proposal, th ese instruments included Articles XII:1, XIV:1 and 
XVIII:B.9 of GATT 1994, Article 4 of the TRIMs Ag reement, Article XII:1 of the GATS and the 
Understanding on the Balance-of-Payments Provisi ons of the GATT 1994 all of which were import 
restricting measures.  While these measures should be preserved, they had limitations since import 
restrictions could have negative e ffects on the level of economic activity of a country and, therefore, 
could aggravate the situation of countries that were  not in the best position  to deal with such a 
decline.  The multilateral trading system must  therefore offer developing and least-developed 
countries faced with external financial difficulties a nd high external debt other means and instruments 
to overcome such situations.  Increasing and genera ting a favourable balance of trade was extremely 
important to overcome external  financial difficulties and the WTO should establish appropriate WT/WGTDF/M/13 
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  instruments to enable these countries to deal with these difficulties.  Thus the WTO provisions dealing 
with external financial difficulties should be st rengthened and supplemented with provisions that 
would promote export and export diversification.  The relevant provisions of the WTO Agreements 
including, inter alia,  GATT 1994, GATS and the TRIMs Agreement should be reviewed with a view 
to enabling developing countries to adopt measures that generate an increase in exports of goods and 
services and contribute to maintaining a stable fl ow of transfers and payments, thus promoting a 
balance in their external financial situations and di versifying exports and goods in services.  A decline 
in the profits generated by primary export pro ducts from developing countries should be addressed 
immediately with a view to eliminating its cause s such as the subsidies applied by developed 
countries.  The necessary instruments must be es tablished within the WTO to assist developing 
countries with high external debt problems or exte rnal financial difficulties.  For example, WTO 
Members should use due moderation in challengi ng under the dispute settlement system measures 
adopted by developing countries to restrict imports or other measures intended to promote exports to 
deal with difficulties arising from the financial situ ation.  Developed countries should improve market 
access conditions for main export products of deve loping countries facing such difficulties, for 
example, by granting duty-free, quota-free access at least for as long as such difficulties were 
observed.  Thus, a regular committee on Trade, Debt and Finance should be established under the 
terms of reference proposed in WT/WGTDF/W/30 and WT/WGTDF/W/32.   
5. The representative of Mauritius, speaking on behalf of the ACP Group
, said that the newly-
elected Chair had a challenging role, i.e. to tran sform the Working Group into a regular committee.  
He recalled the instructions emanating from the Hong Kong Ministerial Conference that the Working 
Group continue its work on the basis of its existi ng mandate.  In his view, up to now, some issues had 
been discussed by the Group but not necessarily in a comprehensive manner.  He therefore requested 
the Group to avoid controversial debates, and to ex amine the issues in a clinical manner and not to 
pass on the problems to other institutions.  The WTO was the appropriate forum to have a multi-
institutional approach.  He recalled the proposal s submitted by Cuba (WT/WGTDF/W/18), and by 
Mauritius and Benin on behalf of the ACP Group (WT/WGTDF/W/35, W/30 and Corr.1 and W/32) 
with respect to the Working Group's 2006 work  programme.  The ACP Group was on the same 
wavelength as Argentina.  The Working Group had neither exhaustively addressed nor made 
appropriate recommendations with respect to issues relating to trade, debt and finance raised by 
developing countries either in their proposals or in oral interventions at various meetings.  These 
issues included:  coherence between trade, debt a nd finance policies and measures;  market access for 
developing countries to achieve or promote debt su stainability;  the relationship between commodity 
price, debt and financial sustainability;  review of WTO provisions relevant to trade, debt and finance 
with a view to addressing BOP problems;  revi ew of how trade-financing facilities could be 
strengthened and made more secure;  trade policy and financial stability;  exch ange rate volatility and 
trade;  sequencing of trade and financial policy reforms;  fiscal reform and trade liberalization vis-à-
vis debt and finance problems;  use of trade restrictions for BOP purposes and related WTO 
provisions;  externally-driven trade liberalization and international reforms;  fast-track mechanisms to 
allow developing countries to take preventive or corrective trade measures to help them deal with 
financial crises;  establishment of a regular committee on trade, debt and finance;  and a mechanism to increase exports to address BOP problems.  The Working Group should now define its 2006 work 
programme with a view to ensuring that these is sues would be effectively addressed, and the ACP 
Group reiterated its suggestions as to the content of such a work programme as contained in 
Paragraph 4(1) of its submission (WT/WGTDF/ W/35).  The ACP Group also reiterated its long-
standing proposal that the Working Group should work towards the eventu al establishment of a 
regular committee on trade, debt and finance within  the WTO's institutional framework to serve as the 
long-term institutional body that could effectivel y carry out the suggested work programme.   
6. The representative of the United States
 agreed that, as was stated in paragraph 1 of the 
proposal from Argentina (WT/WGTDF/W/33), the benefits derived from trade had a positive 
influence on the external financial position of the developing and least-developed countries.   WT/WGTDF/M/13 
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  However, whether those benefits had a positive in fluence would not depend on trade alone, but on 
many other factors such as foreign economic c onditions, border measures affecting trade and capital 
flows and, most importantly, dom estic economic policies and conditi ons.  The WTO mandate did not 
extend to Members’ domestic economic policies.  Reducing and eliminating barriers to trade could 
create opportunities for countries to improve thei r debt servicing capacity or ease balance-of-
payments adjustment problems.  However, trad e barrier reduction under the WTO could not, and 
should not, be expected to guarantee any specific outcome regarding problems whose sources were 
much broader in scope than market access issues alone.  In paragraph 4 of the proposal, Argentina 
repeated this theme arguing that permitted temporary import restrictions were insufficient to deal with 
balance-of-payments difficulties and, therefore, that  the trading system must offer other means to 
overcome external financial difficulties and high fo reign debt.  While no country was more dedicated 
than the United States to the elimination of global tr ade barriers, it remained the case that trade barrier 
elimination by a country’s trade partners would not  necessarily resolve balance-of-payments and debt 
servicing problems when these were firmly rooted in issues of internal policy and conditions.  A 
country seeking to expand its debt servicing capacity  and to restore confidence, whose loss frequently 
underlay balance-of-payments adjustment difficulties,  might in any number of cases eschew its legal 
rights to temporary import restrictions and to e ngage in the reduction of its own domestic border 
barriers to help strengthen domestic economic pe rformance.  Regarding paragraph 7(a) of the 
proposal, the United States noted that the WTO dis pute settlement system wa s reserved for issues 
concerning failures to abide by obligations, and not  for issues concerning the legitimate exercise of 
rights in the balance-of-payments area.  Members,  however, should seek to exercise such rights in 
conformity with all WTO obligations.  With respect to paragraph 7(b), the United States noted that it 
had already agreed in the DDA negotiations to a st andard of duty-free and quota-free access for 97 per 
cent of tariff lines for least-developed countries.  With  respect to paragraph 8, he said that when the 
international trading system was properly underst ood as a generator of economic opportunity – not the 
guarantor of economic outcomes – the issues rai sed in Argentina’s paper would lead to the 
achievement of a highly successful Doha Round with  substantial further trade liberalization by 
developed and developing countries,  and not to the establishment of an institutional forum within the 
WTO to oversee issues such as debt servicing and balance-of-payments adju stment, areas where the 
WTO had little competency.   
7. With respect to the communications from the ACP Group, he said that the United States did 
not see any need for a permanent Committee on Trad e, Debt and Finance.  As reported in the 
Working Group’s report to the General Council (WT/WGTDF/2) of 11 July 2003, Members had 
reached consensus that several themes bore some re lation to the work unde rtaken in the WTO and 
merited further exploration.  These were trade liberalization as a source of growth;  WTO rules and financial stability;  the importance of market acce ss and the reduction of other trade barriers in the 
DDA negotiations;  trade and financial markets;  trad e-financing;  better coherence in the design and 
implementation of trade-related reforms and monitoring;  the in ter-linkages between external 
liberalization and internal reforms;  and exte rnal financing, commodity markets and export 
diversification.  Since the 5
th Ministerial Conference, the Working Group had met to discuss these 
themes and the United States be lieved that the Group had thoroughly explored the relationship 
between trade, debt and finance but had not unco vered any additional role for the Group that was 
consistent with either the mandate of the Group or the WTO as an institution.  The United States 
found some of these discussions informative.  To the extent that others felt that further discussion on 
these topics was warranted, Members were free to raise them in the Committee on Trade and 
Development (CTD) as these issues all fell within th e mandate of that Committee.  The United States 
would welcome such discussions in the CTD.  Within the framework of the Working Group, the 
United States was also willing to consider others’ views as to the specific topics which Members felt 
merited further discussion.  Should the Group reach a consensus on the issue(s) needing additional 
discussions, then the United States would consider  extending the work of the Group for one year 
under its current mandate.  The ACP countries had propo sed a list of changes to the terms of reference 
of the Working Group to make it a permanent body of  the WTO.   The ACP terms of reference for a WT/WGTDF/M/13 
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  committee on Trade, Debt and Finance touched on topi cs such as balance of payments;  exchange rate 
liberalization;  commodity diversification and pricing;  capital accounts and exchange rate 
liberalization;  technical assistance;  market access, tariff escalation and preference schemes;  forgiveness and reduction of foreign debt;  cohe rence and sequencing of development-oriented 
policies, including trade liberalization; and a tr ade-related debt review mechanism to review 
developed countries' policies on development assist ance and debt reduction.  The United States could 
not support any of these changes.  The ACP terms of  reference presented a shopping list of issues that 
were either already appropriately covered in othe r negotiating groups or were not in the purview of 
the WTO.  While some of the issues, for example,  balance of payments; technical assistance; market 
access, tariff escalation and preference schemes; and coherence and seque ncing of development 
policies, were addressed in the context of the CT D, other issues including exchange rates and debt 
forgiveness lay outside of the WTO mandate.  The proposal for a new committee clearly overlapped 
with the mandate of the CTD which was the foru m for discussion of all cross-cutting matters of 
special interest to developing countries.  The CTD also served as a focal point for consideration and 
coordination of technical assistance work on de velopment in the WTO and its relationship to 
development-related activities in ot her multilateral agencies.  Further obviating the need for a separate 
Committee on Trade, Debt and Finance was the s ound position taken in the mandate of the CTD that 
developing-country concerns with respect to a part icular provision of a particular agreement were 
normally dealt with in the Committee responsible for that Agreement.  Redundancies with the CTD 
included its specific standing agenda items on comm odities, technical cooperation and training, as 
well as the mandated annual review of market ac cess for products originating in least-developed 
countries, within which there was frequent discussion, inter alia,  of the erosion of preferences and 
official development assistance to address supply-side  constraints.  Given the overlap with the CTD 
alone, these terms of reference did not, in his view, provide a justification for a permanent committee. 
8. The representative of Argentina
 said that he was reaffirming conceptually what had been 
outlined in Argentina's proposal.  Argentina consider ed the existing WTO instruments to be valid and 
useful but not sufficient, hence th e need for a permanent forum to en able Members to find appropriate 
instruments to take care of the special situa tions which economic history had shown to occur 
repeatedly.    
9. The representative of Mauritius  said that there was no fundamental difference between the 
proposals from Argentina and the ACP Group.  In hi s view, the United States was accepting that the 
Group had to explore the relationship among the issues referred to, but that it was premature to set up 
a committee.  At the same time, he also concu rred with the United States that the developing 
countries' problems were not related only to trade lib eralization and other probl ems related to trade.  
This was a global problem which required a global solution.  The Working Group had to explore all these issues and come up with concrete solutions.   
10. The representative of Cuba
 thanked Argentina and Mauritius for submitting the proposals on 
behalf of the ACP Group of which Cuba was a member .  His delegation considered it important that a 
permanent committee on Trade, Debt and Finance be established.  Firstly, trade was the main source – 
though not the only one – through which countries coul d earn incomes to repay foreign debt.  Trade in 
this way was an incentive.  At the same time, debt c ould turn into a vicious circle.  In most developing 
countries, and in particular in least-developed co untries, debt could become an obstacle for the 
development of trade when high percentages of export income had to be used for debt repayment thus 
preventing its use for the development or diversif ication of exports, or for the development of 
infrastructure necessary to ensure a greater integration of the developing countries in world trade.  
Cuba believed that it was appropriate for the work of the Working Group to have a permanent nature 
in keeping with the mandates of the WTO, IM F and the World Bank in the area of private 
international investment and international trade,  as well as with the cooperation agreements between 
these institutions.  WT/WGTDF/M/13 
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  11. The representative of Colombia  stated that most of the issues such a committee would deal 
with as proposed by the submissions, i.e. prom oting greater market access, eliminating tariff 
escalation and tariff peaks, increasing exports of goods and services from developing countries, eliminating subsidies, etc., were the very topi cs of current DDA negotiations, and were issues that 
would disappear if the Round were successful.  On the one hand, other issues mentioned in the ACP 
communications, i.e. debt cancellation and reduction, etc., were not within the purview of the WTO 
whose objective was to promote trade and eliminate all tariff and non-tariff barriers.  His delegation 
remained available to discuss whether or not it was a good idea to have a standing committee on 
Trade, Debt and Finance. 
12. The representative of the European Communities
 recalled the comments made by his 
delegation at previous meetings and said that he  would therefore limit his comments at the present 
meeting to whether a new body should be establish ed to deal with the issues suggested by the 
proponents.  In this context, he supported the co mments made by the United States on the substance.  
His delegation basically agreed with the first sente nce of the submission by Argentina that the most 
efficient way of overcoming indebtedness and extern al financial difficulties was to be found through 
economic growth.  The main engine  of economic growth was trade liberalization.  Growth of trade 
was the name of the game of the current DDA nego tiations.  Like Colombia  and Mauritius he, too, 
acknowledged that some of the issues referred to in the proposals were being dealt with in other fora 
or in other negotiating groups in the DDA negotiati ons.  As concerned other topics relating to TRIMs 
or balance of payments, he noted that these were being discussed in the context of the implementation 
issues or in the on-going consulta tions with the Director-General.  He therefore agreed with the 
contention that, should the Round be successful, conc rete answers would be found to most of the 
issues raised by the ACP Group and Argentina.  As  concerned GATT-related Articles which were not 
currently on the negotiating table, the European Communities was not convinced that amendments to 
those disciplines would help overcome debt and financial problems that some countries might 
encounter.  The Group had carried out an in-depth re view of the relationship between trade, debt and 
finance and had not found any concre te economic evidence that trade restrictions would be helpful to 
overcome debt and balance of paym ents problems.  The Group also needed to be convinced that 
amendments to the fundamental GATT/WTO rules w ould be helpful in this regard.  The European 
Communities agreed with Mauritius that most of the issues were inter-institutional by nature, and that 
they were not in the strict purview of the WTO but fell more into the coherence-related category.  He 
considered it premature to deal now with the issu e of the establishment of a permanent body.  As 
stated in paragraph 56 of the Hong Kong Minister ial Declaration, Ministers noted the discussions 
taking place in the Working Group on Trade, Debt and Finance on, inter alia,  the issue of Coherence, 
and looked forward to any possible recommendations on steps that might be taken within the mandate 
and competence of the WTO on this issue.  This was an acknowledgement that the WTO itself could 
do its part but that if it wanted to do that cons tructively, it needed to do it in concert and in 
consultation with other international bodies.   The European Communities did not have a priori  a 
closed mind to discussing further the possible establis hment of a committee, but believed that this was 
premature since proof had not been made yet that the setting up of such a committee would be concretely helpful in overcoming the problem s that the Group had so far examined.   
13. The representative of Cuba
 regretted to hear that this was not the right time to deal with the 
problem of debt and finance nor the right forum as there were other international and financial 
institutions which had a more specific mandate to d eal with such matters.  As concerned the argument 
that there was no clear proof that trade liberali zation would necessarily lead to economic growth, 
development and sustainability in terms of debt pa yment, he said that, on the contrary, statistics 
showed that countries that had liberalized most, particularly LDCs which had been forced to  
liberalize because of programmes laid out by mu ltilateral financial ins titutions or which had 
liberalized unilaterally, continued to experience a cy cle of indebtedness and lack of development.  
Therefore, one could not make a categorical st atement that trade liber alization and economic 
liberalization was the panacea for all the problems of  development and indebtedness of countries.   WT/WGTDF/M/13 
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  14. Given that there were differing views on the proposals, the Chairman
 suggested that the 
proponents reflect on how their proposals could be  revised or improved taking into account the 
comments made up to now by other Members with a view to obtaining wider support of the Group for 
their proposals. 
Agenda Item C:  Continuation of the examination of the relationship between trade, debt and 
finance and of any possible recommendations on st eps that might be taken within the mandate 
and competence of the WTO as provided in paragraph 36 of the Doha Ministerial Declaration (paragraph 42 of the Hong Kong Ministerial Declaration, WT/MIN(05)/DEC)  
15. The Chairman
 recalled the Working Group's 2005 report to the General Council circulated 
prior to the 6th Ministerial Session in Hong Kong (WT/WG TDF/4).  The report covered the work 
undertaken and progress made in the examination of the relationship between trade, debt and finance 
and on the consideration of any possible recommenda tions on steps that might be taken within the 
mandate and competence of the WTO as provide d in paragraph 36 of the Doha Ministerial 
Declaration.  At the Hong Kong Ministerial Confer ence, Ministers had taken note of the report and 
had agreed that the work of the Group shall continue  on the basis of the Doha mandate.  The Ministers 
had instructed the General Council to report furthe r to the next Session.  The negotiations being a 
Member-driven process, he invited Members to indicate their views as to how the Group could wrap up its work in order to be in line with other area s of the Doha Development Agenda, and to make the 
Group's final report to the General Council ahead of the next Session of the Ministerial Conference. 
16. No statements were made by Me mbers under this agenda item.   
Agenda Item D:  Other business 
 
17. The Chairman
 suggested that the next meeting of the Group take place on 18 July and said 
that an airgramme with the items pr oposed for the agenda would be circulated at the appropriate time.  
He suggested that from now until then Members, the proponents in particular, consult with each other 
to seek a basis for agreement on the various propo sals.  He remained available for any informal 
discussion during this period.   
18. It was so agreed .  
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