Analysis, statistics, publications, downloads, links, etc

Symposium on issues confronting the world trading system
summary reports by the moderators

6 and 7 July, World Trade Organization, Geneva, Switzerland  

150pxls.gif (76 bytes)

150pxls.gif (76 bytes)

Saturday, 7 July

Session III: Trade & Development

Moderator: David Runnalls — President, IISD

  • Trade is a motor for growth, and trade liberalisation and openness can be and is a key part of development policies. However, unlike sustainable development, trade liberalisation is not an end in itself.

  • Liberalisation and openness do not in themselves automatically lead to desirable growth and poverty outcomes. Lessons of experience, and particularly the mixed experience of a number of trade liberalisation efforts, show that trade policy needs to be one part of an overall set of integrated and mutually reinforcing development strategies, including social safety nets.

  • In order to achieve the broad-based development that will be both sustainable and lead to poverty alleviation, it is necessary to improve the quality of governance and introduce comprehensive social and sectoral policies, including those that address environmental issues. Investment in infrastructure and human capital, attention to the distribution of assets, and sound macroeconomic management are also necessary.

  • The question was raised as to whether quantitative studies of the impact of trade liberalisation adequately captured dynamic effects, especially on natural and environmental capital. The erosion of such capital creates costs which may in some cases offset the gains from liberalisation. This points to the need for complementary and well sequenced trade and environmental policy measures.

  • Trade policy reforms and other policy endeavours must be properly sequenced, and adjustment costs need to be addressed. Views differed as to the appropriate speed of liberalisation.. Development strategies need to respond to country specificities, and the policy-making process should be display ownership and participation.

  • All countries, especially developing countries, have an interest in multilateral trade rules. These should be equitable, and should facilitate the pursuit of development objectives.

  • Developing countries' experience of the implementation of multilateral rules have often proved difficult and onerous, and expected benefits have not always materialised.

  • At the same time, the implementation of WTO agreements by developed countries in areas of special interest to developing countries is inadequate. The Agreement on Agriculture, the Agreement on Textiles and Clothing, and the TRIPS Agreement were cited as examples. The structure of the Agreement on Agriculture favours developed countries, which have the resources to use it over developing countries.

  • The view was expressed that WTO rules should provide greater policy flexibility for developing countries. It has also been pointed out that developing countries do not, or cannot, always avail themselves of existing flexibility.

  • Market access continues to play a critical role in determining trade and development outcomes. Tariff peaks and tariff escalation penalise the exports of developing countries in key areas of export interest, notably agriculture and textiles and clothing.

  • Agricultural export subsidies create difficulties for food production and security in developing countries, and should be phased out. Several raised the issue of the long term secular decline in commodity prices, leading to desperation production with its harmful economic and environmental effects.

  • Liberalisation in developing countries is also important. Although developing countries have undertaken substantial autonomous liberalisation efforts, overall, levels of protection remain higher in developing countries than in developed country markets. Developing countries have also generally bound tariffs at higher levels than their applied rates, which tends to reduce the predictability and stability of reforms, and can act as a disincentive to investment.

  • Foreign Direct Investment patterns are uneven, with the majority flowing to less than a dozen developing countries. A number of factors affect locational decisions by investors, and not all of them can be influenced by policy makers. Investment plays a crucial role in enhancing trade and growth prospects. Policies to mobilise domestic savings and investment are essential. Some felt that greater flexibility in formulation and application of WTO rules was necessary to facilitate this process.

  • Opinions differ on the need for and scope of a new trade round. Implementation is a key element. There should be a "downpayment" on implementation issues prior to the expansion of the negotiating agenda. Some felt that implementation issues should also have priority within a round. Development concerns and priorities should be fully integrated into any new rules. Peaks and escalation, and contingent trade remedies, are all important agenda items for new trade negotiations. The view was also expressed that new trade rules should address issues relating to market structure and corporate power.

  • The question of trade and labour standards was raised, and one view was that there should be a working group on trade and labour standards in the WTO. The alternative view was that trade and labour issues were more properly addressed in a joint ILO-WTO working group.

  • Market access gains through trade liberalisation provide opportunities, but do not guarantee sales. Developing countries often face supply side constraints, including human and institutional constraints, that prevent them from seizing these opportunities.

  • Lack of human and institutional capacity in developing countries also constrains their ability to negotiate and implement WTO agreements. There is a pressing need to address these problems in a comprehensive way. The outcomes of the Uruguay Round could have been improved had negotiations and capacity-building been carried out in tandem. This must be a critical component of a new round. Some, however, expressed the view that there was no need for a new round of negotiations while others stated that for them, a new round was a priority.

150pxls.gif (76 bytes)