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Conditionality

News

Bank “cornering market” in trade capacity building

17 September 2002

After a hiatus, the Bank is rapidly increasing the amount of resources it dedicates to trade research and capacity building. A new briefing from the Bretton Woods Project, Cornering the market: The World Bank and trade capacity building examines the role of the Bank in the Integrated Framework for technical assistance to the least developed countries (IF).

The Bank increasingly influences trade policy via trade-related capacity building (TRCB) rather than “politically incorrect” loan conditionality. This strategy coincides both with the Bank’s re-positioning as a provider of development knowledge and the pivotal role which capacity building has been set up to play in keeping the trade liberalization bicycle moving forward to the next round of multilateral trade talks in Mexico in 2003.

There are two reasons why the Bank’s increasing role in TRCB should be checked. First, is the risk of upstream conditionality. With its size, reach and resources, the Bank’s role in coordinating capacity building will result in an intellectual straitjacket being thrown over the entire trade policy process – from the choice of research areas and how that research is conducted through to the shape of trade-related institutions and the training of trade negotiators themselves. Secondly, the Bank’s lead role in mainstreaming trade into PRSPs via the IF offers the opportunity to lock the trade liberalization agenda into national development plans of the most vulnerable countries. UNDP (2001) has already voiced concerns that in Cambodia “the IF on trade and poverty undermines (rather than supports) key PRSP principles”.

The report recommends that the Bank return to its role of funding rather than carrying out trade capacity building. In its place a diversity of UN, intergovernmental, non-governmental and private sector agencies should be supported. Governments of low-income countries must wrest control of the capacity building agenda away from Washington and Geneva to coordination at the national level. Civil society groups also have an important role to play in both monitoring and participating in these exercises.

Third World Network and Oxfam will also be releasing studies at the Annual Meetings of the means by which the Bank and Fund pressure developing countries to liberalize trade. Scheduled for the meetings are a roundtable on trade, organized by Oxfam and the World Bank, and a civil society workshop on the “iron cage” of the Bank, Fund and WTO.

Cornering the market: The World Bank and trade capacity building, Bretton Woods Project, September 2002