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Trade

FfD-Agenda

 

United Nations, A/ AC. 257/ L. 2, June 2000

"Enhancing trade for financing development

5. Enhancing trade for financing development: ensuring market access for products of export interest to developing countries; addressing issues related to the decline of public revenues from trade liberalization; strengthening regional cooperation/ integration for expansion of global trade; capacity-building and technical assistance, including assistance for trade negotiations and dispute settlement; special needs of Africa, the least developed countries, small island developing States, landlocked and transit developing countries and other developing countries as well as countries with economies in transition with special difficulties "

 

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First Working Paper of the Facilitator

United Nations, A/AC.254/24, March 2001

 

"Heading III: Trade

The expansion of international trade and integration into the world economy are indispensable instruments for promoting long-term economic growth and combating poverty. A central challenge is to ensure a stable, predictable, non-discriminatory, transparent, fair and equitable multilateral trading system in support of development, which contributes in a coherent manner to spread the benefits of trade to all developing countries, ensuring rapid and sustained growth of incomes and exports to finance their development goals.

Trade barriers and producer subsidies by developed countries currently impose costs on developing countries that significantly exceed aid flows. Lifting them would allow many more developing country products reach the markets of developed countries. The lifting of conventional barriers should not be followed by the introduction of new ones –even if these are in connection with commendable objectives, such as to improve labor or environmental practices. Support for trade liberalization and improvement of standards and safeguards must be separate and reinforce, not undermine.

Trade liberalization in developing countries must be well-tailored and phased in line with national economic and social objectives and be complemented with greater diversification and a substantial expansion of national productive capacities of developing countries, including through appropriate transfers of technology and capacity building. Access to appropriate risk management mechanisms is also an important objective.

How to support the enhancement of the development dimension of multilateral trade agreements? How to ensure that any future WTO trade negotiations be best linked to development goals? How to provide further political impetus to the work taking place at the WTO and elsewhere to enhance the impact of trade on development?

How to deepen the political momentum building towards ensuring full market access of LDC’s exports to the markets of all industrialized countries and taking further positive steps in this direction for other developing countries? By type of beneficiary country (SIDS, others)? By sector (e.g., focusing in the first instance on textiles and clothing and on the reduction of barriers of trade in agricultural products, in particular developed countries’ subsidies for agricultural products)? By impact (e.g. focusing on the removal of tariff peaks or anti-dumping measures affecting the export products of developing countries, expanding systems of preferences)? By advancing simultaneously in all these fronts?

How best to enhance the contribution of regional and subregional cooperation and integration as building blocks to foster global trade and development?

How to strengthen the contribution of the World Bank, governments, donors and other financial and development institutions, both public and private, in support of a diversified export capacity to benefit from trade? How best to ensure fully-funded programmes to assist developing countries to remove supply-side constrains and improve trade infrastructure?

How to strengthen the existing mechanisms of the international financial institutions for compensatory balance of payments support in times of commodity price shocks?

How can the relevant international organizations support developing countries to gain access to risk management instruments in commodity markets and cope with persistent terms of trade decline and commodity price instability?

How can the relevant international organizations contribute to ensure access for developing countries, in particular vulnerable countries such as SIDS, to insurance against natural catastrophes?

Which steps should be taken on a priority basis to match the requirements of technical and financial assistance for capacity-building in this regard, including in areas such as trade negotiations and dispute settlement as well as in support of implementation capacities? How to support the Integrated Framework for LDCs and build upon its experience for enhancing the coherence of trade capacity-building for other developing countries?"

 

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Report of the Secretary-General
to the Preparatory Committee for the
High-Level International Intergovernmental Event
on Financing For Development

United Nations, A/AC.257/12, January 2001

"Donor countries and international financial and developmental institutions should pursue a global, fully-funded programme to assist interested developing countries, particularly least developed countries and other low-income countries, in liberalizing, as appropriate, the trade sector of their economies, building the necessary policy, physical and human capacity to trade competitively in goods and services, and ensuring that gradual trade liberalization is part of, and consistent with, development and poverty reduction strategies.(...)

All trading partners should liberalize trade in goods and services of particular interest to developing economies, seeking to achieve bound, expanded and commercially meaningful market access for such goods and services. Particular attention should be given, in the first instance, to the full integration of textiles and clothing into WTO; the reduction of barriers of trade in agricultural products; the removal of tariff peaks and escalation affecting the export products of developing countries; and the expansion, where appropriate, of Generalized System of Preferences (GSP) schemes.(...)

All developed countries should immediately provide duty-free, quota-free market access to all non-arms exports of least developed countries and highly indebted poor countries and consider doing the same for other developing countries, particularly the countries of Africa, small island developing States, landlocked and transit developing countries, and other developing countries, as well as countries with economies in transition with special difficulties in attracting financing for development.(...)

WTO members should ensure that the WTO agreements and their associated disciplines are applied in ways conducive to development. Developed country members of WTO and international financial institutions should ensure that adequate financial and technical assistance is provided to developing countries for their implementation of the WTO agreements. WTO members should also not use contingency measures and restrictive rules of origin, and should ensure that standards, technical regulations and Sanitary and Phytosanitary Standards (SPS) measures are not used to obstruct trade, that they can be adequately observed by developing countries and that appropriate assistance is provided to enable them to do so.(...)

The international financial institutions should continue adapting and making more flexible the mechanisms through which they provide balance of payments support in times of commodity price shocks.(...)

The relevant international organizations should urgently formulate measures to help developing countries to deal with commodity price risks, including the possible establishment of a new global facility to facilitate developing country access to commodity price risk management and structured commodity finance mechanisms and to assist in the development of regional and national commodity exchanges.(...)

The multilateral development banks should spearhead the development of a major programme to assist developing countries, particularly small and vulnerable economies, in diversifying their export base in terms of both the product mix (goods and services) and destination markets. The importance of export diversification programmes should be kept in mind by bilateral donors and all multilateral aid agencies in considering expenditure and assistance priorities. WTO should monitor vigilantly the use of anti-dumping measures and any voluntary export restraint agreements, particularly when used against developing countries.(...)

Donor countries should contribute rapidly and generously to the Trust Fund established in the context of the Integrated Framework. WTO members should expand the scope of the Integrated Framework beyond the least developed countries, to cover other developing countries, particularly countries of Africa, small island States and landlocked and transit developing countries."

 

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Joint Statement of the Co-Chairmen
at the Conclusion of the First Part of the
Third Session of the Preparatory Committee

United Nations, 8 May 2001

 

" III. Trade

The active discussion of international trade in the context of financing for development that began at the Second Session of the Prep Com resumed in the current session and involved many Member States, as well as a number of international organizations and civil society representatives.There was a convergence of views that trade can and should give an important boost to economic growth and employment, that it is for most countries the central source of external resources for development, that global trade liberalization can offer important development opportunities but also serious economic challenges, and that countries differ greatly in their capacity to take advantage of the opportunities and successfully meet the challenges. The international community already acknowledges different country capacities by granting, to varying degrees, special preferences, financial and technical assistance in trade-related matters to specific groups of countries, in particular, Africa, least developed, small island developing States and land-locked developing countries. In addition, today there is a greater appreciation of the need for realistic appraisals of the appropriate sequencing and time frame for implementation of trade policy commitments of developing countries. In this regard, several countries reported how helpful it has been to them to liberalize trade first within regional groupings.

The discussion underlined the inescapable linkage of trade and development policy and the importance given that all countries should meet all of their trade policy commitments, including understandings agreed as "best efforts". Many speakers observed that, while they are ready to expand their exports, they do not yet enjoy sufficient access to export markets even though many of their export products are part of the "built-in agenda" of the WTO.

It was also emphasized that gaining increased market access is only valuable to developing countries if they can increase production to supply those markets. This is a development question, entailing investment in export capacity and related infrastructure. It thus involves domestic and international financial systems, and their public and private institutions. Moreover, liberalization of the trade regime of developing countries sometimes embodies substantial adjustment costs, which, as noted by the WTO membership in its paper for the Prep Com, may require appropriate international support policies and compensatory measures (para 6). It was also observed that before proposals for international trade policy changes are made, social and environmental impact assessments should be undertaken at national level, as they typically are for large investment projects. In addition, several speakers underlined the importance of stronger policies to ameliorate the negative effects of terms-of-trade losses and commodity price volatility.

 

Toward policy priorities

Linking international trade negotiations to development goals: The liberalization and reform process, as noted by several speakers and as described in the paper of the WTO membership, aims to improve market access in all sectors and elaborate balanced and equitable rules for the conduct of international trade in goods and services (para 9). The WTO membership described as fundamental the principles of non-discrimination, predictability, transparency, equity and provisions for special and differential treatment (para 7), a point echoed by speakers in the Prep Com. In addition, speakers were concerned that the lifting of conventional trade barriers not be followed by imposition of new ones, even if aimed at commendable objectives. The ILO noted that it was seeking parallel progress on labour standards that should reinforce work on trade policy. More generally, the WTO membership called for the mainstreaming of trade policies into the wider framework of development and poverty reduction strategies (para 19). It was suggested that FfD might focus on bottlenecks to development and how to resolve them so that the benefits of trade liberalization would be fully realized. It was also observed that adequate growth of global effective demand was necessary to translate improved trade opportunities into increased trade itself, an issue with strong systemic aspects.

Developing appropriate arrangements for capacity building in trade matters: Speakers in the Prep Com welcomed steps to strengthen the Integrated Framework for technical assistance for least developed countries. It is important, not only to boost the capacity of these countries to implement WTO agreements, but also to raise their ability to participate in trade negotiations. Other developing countries also have trade-related capacity-building needs. There is considerable interest in increasing trade-related technical assistance overall and better coordinating the various bilateral and multilateral assistance efforts.

Mechanisms for managing risk in international trade: There are certain inescapable risks that countries face in international trade and most financial mechanisms for mitigating their effects are provided through the private sector. The European Union has recently adopted a "system of additional support" to help the African, Caribbean and Pacific countries with which it is associated to mitigate instability in export earnings. Speakers noted two other international initiatives:

The Compensatory Financing Facility (CFF) of IMF provides financial assistance, usually in association with stand-by arrangements, to countries experiencing temporary export earnings shortfalls and temporary excess cereal import costs. It was suggested that the scope for use of the CFF be expanded and that it be strengthened. The World Bank established an international task force on commodity risk management in developing countries to explore the potential role of international cooperation in facilitating access of developing countries to market instruments to deal with intra-annual commodity price fluctuations. Speakers welcomed this initiative, although major policy aspects were still to be worked out, such as the cost of premiums to be borne by producers and whether to subsidize use of such a mechanism, at least initially. Work on the initiative should be accelerated. Insurance against natural disasters is generally provided by the international private sector. It has been suggested that relevant international organizations could help boost access of vulnerable countries, such as small-island developing States, to such insurance. This could be a matter for public/private partnerships.

There is a need to proceed with the built-in agenda of the WTO.

Developing institutional arrangements for UN/WTO dialogue: WTO observed that although there were no "organic" links between the United Nations and WTO, "strong working links" had evolved. Ideas were expressed for how the dialogue between the United Nations and WTO might be organized, building on the experience of ECOSOC and the Bretton Woods institutions."

 

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High-Level Panel on
Financing for Development -
Recommendations & Technical Report

United Nations, A/55/1000, 26 June 2001

 

" Recommendations:

Trade

Thanks to eight rounds of multilateral negotiations, much has been done in half a century to dismantle tariff and non-tariff barriers to trade. But by far the main beneficiaries of trade liberalization have been the industrial countries. Developing countries’ products continue to face significant impediments in rich country markets. Basic products in which developing countries are highly competitive are precisely the ones that carry the highest protection in the most advanced countries. These include not only agricultural products, which still face pernicious protection, but also many industrial products subject to tariff and non-tariff barriers. Therefore, there is an urgent need to initiate a new round of multilateral trade negotiations. Although some panel members felt it was crucial that developed countries first rebuilt confidence in the WTO by delivering on both the spirit as well as the letter of previous agreements, the Panel as a whole strongly endorses the launching of a new round of trade liberalization at the next WTO ministerial meeting, to be held in Qatar next November.

The Panel recommends that the following issues be addressed:

The implementation of the Uruguay Round. This issue concerns not only full compliance with the commitments that industrial countries made under the Uruguay Round but also a responsible review—open and generous but consistent with free trade principles—of some regulations that developing countries have found either extremely hard to implement or outright counterproductive. Chief among these are standards (technical barriers to trade), anti-dumping, trade-related intellectual property rights (TRIPS), trade-related investment measures (TRIMS), subsidies, customs valuation, and phase-in periods for developing countries.

§ Liberalization in agriculture. In this field, it is vital for developing countries to discuss and get from industrial countries a significant improvement in market access, an elimination of export subsidies, and a tightening of support to domestic producers.

§ The total elimination of remaining trade barriers in manufacturing. Existing barriers in this sector are mostly at the expense of developing countries. An obvious, but sadly not unique, example of this injustice is protection on textiles and clothing. Some panel members consider that welfare gains for all parties would be even greater if the new round also liberalizes trade in services.

Technical Report:

" Trade

Trade is an engine of growth. Both the competitive pressures needed to produce successfully for the export market and access to the imports necessary to build a modern economy are essential for any sort of rapid growth, equitable or otherwise, environment-friendly or environment-destroying. Making growth equitable and sustainable is the task of other policies; there is in general little reason to regard trade as inherently biased one way or the other on those dimensions. But since poverty in a poor country cannot be overcome without sustained rapid growth, the willingness and opportunity to trade liberally are critical to long-run poverty reduction. It is notable that, at least since the 1960s, every country that has pulled its people out of poverty has made a significant opening to trade a central feature of its economic strategy.

The past decade has seen a notable liberalisation of trade by developing countries, analogous to that earlier undertaken by today’s industrial countries, at least as regards trade among themselves. Unfortunately, the liberal trade regime that now prevails among the industrial countries (except in agriculture) is not matched by free market access extended to the products of interest to developing countries. In part this is doubtless due to simple protectionism—jobs were perceived to be at stake. But in part it is also due to the earlier attempts of developing countries to stand outside the process of making bargains about trade, and to expect to benefit from concessions without making concessions in return. That finally changed in the most recent round of multilateral trade negotiations, the Uruguay Round, where developing countries did participate actively in the bargaining. Their involvement won them some notable gains, such as the tariffication of quantitative restrictions in agriculture and the phasing out of the Multi-Fibre Arrangement—albeit gains with a long time fuse. One important task of the coming years will be to make sure that the industrial countries fully implement their commitments under the Uruguay Round accords to liberalise trade in areas of great significance to developing countries.

Even after the Uruguay Round commitments are completely implemented, however, substantial barriers to developing-country exports will remain. One recent (post-Uruguay Round) attempt to quantify the benefits of removing all such trade barriers estimated the potential welfare gain to developing countries at about $130 billion a year (at current prices, and covering only the gains on visible trade)[8] . Another study concluded that even a 50 per cent tariff cut could give developing countries a gain in the region of $90 billion to $155 billion a year[9] . It is extremely important that developing countries be given the opportunity to realise these gains. Although some panel members felt it was crucial that developed countries first rebuild confidence in the WTO by delivering on both the spirit as well as the letter of previous agreements, the Panel as a whole felt the best approach would be to initiate a new round of multilateral trade negotiations at the ministerial meeting of the World Trade Organization (WTO) planned for Qatar in November 2001. This should be truly a Development Round, and indeed that title has been widely suggested. The industrial countries, whose leadership will be indispensable in making a new round successful, will need to accept that the negotiations are centred on questions of concern to developing countries. They must enter the negotiations prepared to make substantive concessions on those issues; many developing countries might find it difficult to start negotiations without some assurance of such willingness. The Qatar ministerial meeting should set an objective of making trade as free between industrial and developing countries as it already is among the industrial countries.

A Development Round would need to deal with the following agenda:

ˇ Finishing the business of the Uruguay Round. This means securing full implementation of the spirit as well as the letter of the commitments that industrial countries made in those negotiations. There is also a need to review regulations that developing countries have found either hard to implement or unexpectedly onerous.

ˇ Strengthening the rules of the WTO system . This is of critical importance for developing countries, because it is the least powerful countries that most need strong rules. Anti-dumping rules, for example, are being increasingly abused and need to be disciplined by the international system.

ˇ Liberalising trade in agricultural products . All analyses indicate that this would benefit developing countries. Of course, the implications of full liberalisation would be enormously greater for some products, like sugar, than for others. The real cost of producing sugar in developing countries is as little as a third what it is in some EU countries, but developing-country exports are kept out by an EU tariff of 213 per cent. Agricultural subsidies in the member countries of the Organisation for Economic Co-operation and Development (OECD) amounted to $361 billion in 1999, more than the entire GDP of Sub-Saharan Africa. The aim should be complete liberalisation of agricultural trade, with at most two qualifications. First, in the industrial countries, any concern to sustain the real income of the rural sector should be addressed by subsidies focused on environmental protection rather than agricultural output. Second, in developing countries, a continuing concern with food security may justify variable import tariffs when world prices are low, given that these countries cannot afford extensive farm subsidies.

ˇ Reducing tariff peaks and tariff escalation Even after the Multi-Fibre Arrangement has been phased out under the Uruguay Round agreement, the average tariff on textiles and clothing in OECD countries will be 8 per cent, compared with 3 per cent on other manufactures. For many other developing-country exports, market access is limited by particularly high tariffs or by tariffs that escalate with the degree of processing. This prevents developing countries from producing higher-value products and moving up the development ladder.

ˇ Reforming trade-related intellectual property rights . This was a topic covered for the first time by the multilateral trade regime in the Uruguay Round. But many developing countries have found it impractical to impose and enforce state-of-the-art intellectual property laws on the model prescribed in the WTO agreement. Furthermore, some of the results, such as the high cost of HIV/AIDS medicines and other patented pharmaceutical products in poor countries, have aroused much anxiety. This whole question needs to be re-examined, with a view, among other things, to seeking ways to increase the availability of low-cost medicines without unduly affecting the incentive to innovate and introduce new products.

ˇ Legitimating limited, time-bound protection of certain industries by countries in the early stages of industrialisation . However misguided the old model of blanket protection intended to nurture import substitute industries, it would be a mistake to go to the other extreme and deny developing countries the opportunity of actively nurturing the development of an industrial sector. A requirement for international approval of such protection could be a help to the governments of developing countries in resisting excessive demands from their domestic lobbies (and from multinationals considering local investment).

ˇ Taking a new look at liberalising migration . The time may also be ripe to start seeking some measure of international agreement on ‘the movement of natural persons’, meaning rules governing short-term overseas employment, which could provide an even larger source of foreign exchange for developing countries than in the past.

This list is not intended to suggest that a new trade round should be limited to these topics. Some Panel members believe that the gains to all countries could be even greater if a new round also includes services. Rather, the purpose of the list is to identify those topics that must not be omitted if developing countries are to be fully included in the world trading system on an equitable basis.

One issue that has impeded agreement on the launch of a new round is the use of trade sanctions to promote labour or environmental standards. These topics are best dealt with by developing the international institutions specifically focused on labour and the environment, as discussed in section 5.

In recent years trade liberalisation has often occurred on a regional rather than a global basis. Regional agreements can be a constructive way of advancing more liberal trade and are often of special importance for small countries, but it is important to make them building blocks of, and not stumbling blocks to, a global free trade system. Such agreements should be fully WTO-consistent, and their pursuit should not become an excuse for delaying multilateral liberalisation.

Trade rounds take a long time to reach fruition. The problems of the least developed countries cannot wait that long. Some initiatives have already been taken to strengthen their trading position. The WTO, the World Bank, the International Monetary Fund (IMF), UNCTAD, the United Nations Development Programme, and the UNCTAD- and WTO-sponsored International Trade Centre have jointly launched an ‘Integrated Framework’ designed to build up the capacity of the least developed countries for trade negotiation and to assist their export diversification. The extent to which countries are able to take advantage of improvements in market access obviously depends on a range of supply-side factors, many of which are covered by the discussion of domestic policies in the previous section. In the case of many least developed countries, these problems are so acute that it is right for the international community to give some immediate help in capacity building. The Trust Fund that has been established to support the Integrated Framework will do just that. It deserves generous financing.

The WTO has also tried to shame the industrial countries into improving market access for the least developed countries. New Zealand and Norway have already opened their markets completely. The United States has responded with its special programmes for Africa and the Caribbean, which have received congressional approval and are now being implemented, although unfortunately with limitations that are liable to curtail their value. The European Commission proposed that the European Union phase out all quota and tariff restrictions on imports of everything but arms from the least developed countries over 2002 to 2004. That proposal was approved in the Council of Ministers in February 2001, although with regrettable delay in giving unrestricted market access in bananas, rice, and sugar. It is important to secure faithful and prompt implementation of this commitment and to obtain actions at least as good from all other industrial countries. An immediate and useful step would be to implement without further delay all Uruguay Round concessions affecting the least developed countries, provided, of course, that such concessions not be allowed to substitute for overall liberalisation.

Many of the poorest countries still remain overwhelmingly dependent on primary commodities for their export revenue. In fact, more than 50 developing countries, including about two-thirds of the HIPCs, depend on three or fewer commodities for more than half their export earnings. This exposes them to two problems. One is that over the long run the prices of these goods have tended to fall in real terms, making it increasingly difficult for producers in these countries to earn a decent living and for the countries to buy the imports they need to grow. The other is that both the producers and their countries are buffeted by strong cyclical pressures, because commodity prices often vary sharply with the state of global demand.

It is difficult to imagine how the first problem could be resolved by direct intervention to support prices. International commodity agreements have occasionally managed to hold up prices for a few years. But such success has invariably attracted additional producers and dampened demand until the agreement finally collapsed, leading to adjustments even sharper and more painful than would have been experienced in a free market. At the root of the problem is that, under current circumstances, any rise in commodity prices spurs a rush of new entrants hoping to scratch out a living by supplying the world market, even if at a starvation wage. The problem will be overcome only when development has proceeded far enough to make such desperate behaviour unnecessary.

There is also a long history of attempts to reduce the cyclical variability of commodity prices, or at least to reduce its impact. Although some modest initiatives, such as the IMF’s Compensatory Financing Facility, have been useful at the margin, none of the grand proposals floated, from Keynes onward, has ever secured agreement. Even commodity agreements that did not aim to hold prices permanently above their market-clearing levels have eventually collapsed. It is regrettable that the Compensatory Financing Facility was scaled back in the 1980s. It deserves to be restored and improved.

One interesting new approach for making a limited assault on the problem is a scheme for commodity risk management in developing countries[10] . This new initiative differs from its predecessors in two key respects. First, it makes no attempt to stabilise market prices, but rather focuses on the price received by the individual producer. Second, although it envisages the creation of a new intermediary within some international organisation to operate the scheme, this intermediary would reinsure its contracts with private sector insurers, so that the terms it offered would be essentially those being quoted by the private sector. The job of the intermediary would be to make these terms widely available to poor farmers and other producers in developing countries who now lack access to private insurance.

The proposed intermediary would sell insurance to producers on the prices of at least the 12 principal commodities exported by developing countries. Aid resources could be used to pay a part of the premium costs of poor producers, provided the eligibility criteria are unambiguous; producers with incomes above that threshold would be required to cover the costs. Since the intermediary would quote premium rates based on going rates in the commercial markets with which it would reinsure most of its risk, it would be largely risk-free.

How useful would such a mechanism be? It is important to be clear that it would not claim to stabilise prices received by producers, but rather to give them advance assurance of the minimum price that they will receive. This would be of special value to farmers with a choice of annual crops. They would be better able to decide which crop to sow if they knew, at planting time, the minimum price they would eventually receive for each alternative crop. The scheme would only stabilise the incomes of other producers (such as those harvesting coffee and other tree crops) to the extent that they would make claims on their insurance when times are bad and not when they are good. As world market prices fluctuate, so would the guaranteed minimum price that could be bought for a given insurance premium. Although the potential benefits of such a scheme are fairly modest, it would be worth initiating one promptly, at least on a trial basis.

In contrast to the many initiatives over the years to liberalise trade, and more recently to free capital movements, there has never been any comparable initiative to free the movement of persons between countries. In the light of demographic developments in the industrial countries (in particular, the ageing of their populations) and the potential benefits of migration in generating remittances to developing countries, the time has come to put this issue on the international agenda.

The increased trading opportunities called for in this section would create the chance for many more developing countries to enter the virtuous circle of export-led growth. These better market opportunities would need to be supplemented by strong support for capacity building and efforts to limit the havoc wrought by weak commodity prices. Only then will trade fulfil its potential in helping the poorest countries achieve the International Development Goals."

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Draft Outcome Prepared by the Facilitator

United Nations, 09/17/01

 

" International trade as an engine for growth and development

18. Trade liberalization would substantially contribute to achieve development worldwide, benefiting both developed and developing countries. Yet, trade barriers and subsidies in developed countries currently impose costs on developing countries that significantly exceed aid flows. Those barriers and subsidies must be eliminated. We recognize the need to ensure an open, equitable, rule-based, predictable, and non-discriminatory multilateral trading system, that decisively benefits all developing countries and countries with economies in transition, including low-income countries, SIDs, and landlocked developing countries.

19. The lifting of trade barriers should not be followed by the introduction of new ones –even if these are motivated by commendable objectives. Labor and environmental concerns need to be properly addressed, but should be pursued as separate goals, through the appropriate institutions and fora, so that efforts to achieve trade liberalization and improved labor and environmental standards can be mutually reinforcing.

20. We commit ourselves to deepen all efforts made thus far to ensure that world trade supports development goals, including by securing full implementation of all commitments made by industrialized countries at the Uruguay Round, and by multilateral trade negotiations geared to:

Strengthening the rules and disciplines of the World Trade Organization, to prevent abuses to the detriment of developing countries, such as abusive antidumping measures or technical standards against their exports. Liberalizing trade in agricultural products, fully eliminating output and export subsidies in developed countries Reducing tariff peaks which affect developing countries exports, and eliminating tariff escalation which discourages developing countries from exporting higher value added products. Eliminating the trade barriers of developed countries in manufactures, particularly labor-intensive manufactures such as textiles and clothing. Revisiting the issue of trade-related intellectual property rights, with a view to promoting the widest availability of knowledge for development without unduly affecting incentives to innovate, taking care –in particular- of the health imperatives of developing countries.

21. Regional and sub-regional cooperation and integration processes can play a key role in fostering global trade and development, by improving competitiveness and export diversification. We also commit ourselves to enhancing the role of regional and sub-regional agreements and free trade areas as building blocks in the construction of a better global trading system.

22. To speed up our efforts to ensure full access of developing country exports to all markets—with no exception but arms—, we call on all industrialized countries that have not already done so, to take immediate steps in benefit of the LDCs, as well as in support of the New African Initiative and the development efforts of all other low-income countries, SIDs, and landlocked developing countries.

23. We also call on the multilateral financial and development institutions to devise ways and means to stabilize the export revenue of developing countries that still depend heavily on commodity exports, in particular low income countries, SIDS and landlocked developing countries, including by restoring and improving the IMF compensatory financing facility scheme, establishing appropriate multilateral commodity risk management mechanisms, and ensuring access to insurance against natural catastrophes.

24. We further call on multilateral and bilateral financial and development institutions to deepen their support, with additional resources, of efforts by developing countries, including low-income countries, SIDs, and landlocked developing countries, to remove supply-side constraints, improve their trade infrastructure, diversify export capacity, and enhance their participation in multilateral trade negotiations, trade opportunities, and the dispute settlement mechanism."

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Revised Draft Outcome Prepared by the Facilitator

United Nations,12/06/01

 

"International trade as an engine for development

23. Freer trade would substantially stimulate development worldwide, benefiting both industrial and developing countries. The current slowdown in the world economy urges us to reaffirm our commitment towards trade liberalization, and ensuring that trade plays its full part in promoting recovery, growth and development. We thus welcome the WTO’s decision reached in Doha to launch a new round of trade negotiations and the intent to place the needs and interests of developing countries at the heart of the WTO work program.

24. To benefit fully from trade, which in many cases is the single most important source of development financing, developing and transition countries must establish appropriate institutions and policies. Trade liberalization is a fundamental element in the development strategy of a country. The active promotion of exports and the attraction of foreign direct investment boost economic growth and are an important source of employment.

25. Nations will only attain full benefits from such reforms if we ensure an open, equitable, rule-based, predictable, and non-discriminatory multilateral trading system. Trade barriers, subsidies, and other trade-distorting measures, particularly in agriculture, have negative effects on developing countries that significantly exceed the value of aid flows—and must be eliminated.

26. To ensure that world trade supports development goals, we will strive to:

§ Strengthen the rules and disciplines of the World Trade Organization, to prevent abuses, particularly in antidumping measures; secure full implementation of all commitments made at the Uruguay Round; and facilitate, in non-discriminatory terms, the accession of all developing and transition countries to the WTO.

§ Liberalize trade in agricultural products, eliminating export subsidies and substantially reducing production subsidies in developed countries; accelerate the elimination of trade barriers of developed countries in manufactures, particularly labor-intensive manufactures such as textiles and clothing; liberalize trade in services of export interest to developing countries; address the issue of labor migration through rules governing short-term overseas employment; and reduce tariff peaks, eliminate tariff escalation, and make fully operational the special and differential treatment provisions in trade agreements.

§ Regarding trade-related intellectual property rights, ensure recognition of traditional knowledge and promote the transfer of knowledge and technology, while providing incentives to innovate, and respecting—in particular—the health needs of developing countries.

We encourage the WTO member countries to make their best efforts to achieve these goals as they implement the WTO work program adopted at Doha.

27. We also commit ourselves to enhancing the role of regional and sub-regional agreements and free trade areas in the construction of a better global trading system. International financial institutions, including the regional development banks, should give priority to projects that support sub-regional and regional integration among developing countries.

28. To speed up our efforts to ensure full and predictable access of developing country exports to all markets, we call on industrial countries that have not already done so, to take immediate steps to benefit the least developed countries, as well as to support the New Partnership for African Development, and the small island, landlocked, and transit developing countries. At the same time, developing and transition countries must reduce, and when possible eliminate, trade barriers among themselves.

29. To further support national efforts to benefit from trade opportunities, we call on multilateral and bilateral financial and development institutions to deepen their support, with additional resources, for removing supply-side constraints, improving trade infrastructure, diversifying export capacity, strengthening institutional development, and enhancing overall productivity and competitiveness.

30. Multilateral help is also needed to stabilize the export revenue of countries that still depend heavily on commodity exports. Thus, we welcome the review and impending activation of the IMF Compensatory Financing Facility. It is also important to empower developing country commodity producers to insure themselves against risk, including against natural disasters.

31. In support of the process launched in Doha, attention should go to strengthening the participation of developing countries in multilateral trade negotiations. In particular, developing countries need assistance to participate effectively in the new WTO work program through enhanced cooperation of all relevant stakeholders, including UNCTAD. To these ends, we undertake to make the financing of trade-related technical assistance and capacity building more secure and predictable."

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04 June 2002

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