Developing Country Priorities and Challenges in Trade L Alan Winters University of Sussex Also Centre for Economic Policy Research (London) and Centre and Economic Performance (LSE)

29th November 2001PECC XIV Trade Policy Forum2 Fundamental Objectives: Poverty Reduction Growth Social and Political Development Equity

29th November 2001PECC XIV Trade Policy Forum3 Direct Determinants 1 efficiency 2 productivity growth 3 investment - especially in people 4 widespread productive employment 5 minimum income levels for the poorest 6 equitable and efficient world system Trade policy contributes via these Trade policy contributes via these

29th November 2001PECC XIV Trade Policy Forum4 Mostly Domestic Items 1 to 5 are domestic They respond to a country’s own policy Most key trade policy issues are unilateral Most challenges in trade policy are also domestic –distribution –special interests

29th November 2001PECC XIV Trade Policy Forum5 The Trading System Does it help the domestic dimensions? Is it equitable? Is it efficient?

29th November 2001PECC XIV Trade Policy Forum6 Trade and Growth positive link –technology, inputs, competition, market signals, ideas, the only doubt is methodological growth benefits the poor on average

29th November 2001PECC XIV Trade Policy Forum7 Trade Liberalisation and Poverty long-run - growth and productivity medium term –prices –employment and wages –government revenue and spending short term –risk and variability –adjustment costs

29th November 2001PECC XIV Trade Policy Forum8 Analysing Trade and Poverty Conceptual Framework –Implementation –Policy implications Specific Liberalisations: –agriculture, TRIPS, services, manufactures, subsidies, anti-dumping, competition policy, environmental standards, labour standards, TRIMS and investment

29th November 2001PECC XIV Trade Policy Forum9 Trade Liberalisation and Poverty: A Handbook Do It Yourself Every case is different Political will and analytical capacity Centre for Economic Policy Research, London, October 2001 (

29th November 2001PECC XIV Trade Policy Forum10 Key Sector: Agriculture Poverty is rural Agriculture is their dominant source of income Spill-overs to non-farm rural workers Food is main expenditure item of poor

29th November 2001PECC XIV Trade Policy Forum11 Developed Countries Must Open Markets –Non-discriminatorily, not preferentially Slash domestic support –Genuinely de-coupled support Eliminate export subsidies

29th November 2001PECC XIV Trade Policy Forum12 Developing Countries Eliminate anti-agriculture bias Effective policies competitive markets; extension infrastructure; land and credit access Food Security Individual poverty effects depend on net supply positions; asset distribution ability to adapt; leaving agriculture

29th November 2001PECC XIV Trade Policy Forum13 Services - A Huge Opportunity Highly regulated/protected Competition is the key Improve quality and cost Public services - need not include Ensure the poor have access Net position of poor varies by sector

29th November 2001PECC XIV Trade Policy Forum14 Temporary Movement of Labour THIS IS NOT MIGRATION Unskilled labour as well as skilled $300 billion per year? Very Complex - especially security separate GATS from regular visas recognition of qualifications do not tax for benefits not received

29th November 2001PECC XIV Trade Policy Forum15 Manufactures Liberalise trade in both directions Developing countries –have far higher tariffs –are rapidly growing as markets Developed countries –peaks and escalation –honestly abolish MFA

29th November 2001PECC XIV Trade Policy Forum16 Institutions and Growth corruption - worse in closed economies conflict resolution distribution WTO can help –examples, support for institutional reform –blueprints –technical assistance Avoid external imposition

29th November 2001PECC XIV Trade Policy Forum17 Regional Trading Arrangements attenuate competition (fewer partners) less efficient suppliers prone to exceptions little evidence of depth or breadth or speed focus inwards not outwards don’t encourage global process

29th November 2001PECC XIV Trade Policy Forum18 Proposals on Regionalism Apply GATT 24 and GATS 5 to developing countries Define ‘substantially all’ –95% after 5 years; 98% after 8 Enforce ‘other restrictive regulations’ ban Use DSP to protect rights of excluded countries –especially for rules of origin

29th November 2001PECC XIV Trade Policy Forum19 Scarcity of Skills the key problem of developing world encourage education capacity building –but draws skills from other tasks –leakage to private sector is a success –allow developing countries to choose where/what –in research and analysis as well as government

29th November 2001PECC XIV Trade Policy Forum20 Economise on Skills: Trade Policy simple and robust trade policies easy to implement and plan not negotiable with interests save private resources as well as public

29th November 2001PECC XIV Trade Policy Forum21 Economise on Skills: The WTO small and straight-forward agenda simple agreements with few exceptions test agreements with a ‘use of skills’ audit let developing countries intervene late but effectively provide analytical support without strings co-operate on analysis and negotiation

29th November 2001PECC XIV Trade Policy Forum22 On these criteria Doha disappoints Investment and Competition Policy are to be negotiated –starting now in their Committees Environment is ‘in’ –even if only in a small way at first Trade facilitation is ‘in’