In this joint World Bank-IMF-civil society session, the Bank and Fund outlined their plans to support the WTO Doha round of trade negotiations.
The session opened with the Bank’s international trade head Uri Dadush saying what he told president Wolfowitz during a recent briefing on trade. “Development is working”, he told the president, “and the reasons for growth are the policies pursued over the last fifteen years. Inflation is down, deficits are down and tariffs are down.”
Dadush said that the Bank’s support for the Doha round would include: pressure on industrialised nations to reduce agricultural tariffs; encouragement for all countries – “even the poorest” – to open up their markets, since “at the end of the day, countries benefit most from their own liberalisation”; aid for trade. Aid for trade would include a scale-up of the integrated framework for trade-related capacity building from $30 million to $400 million, and increased support for regional trade initiatives.
Hans-Peter Lankes, head of trade for the IMF, added that the Fund would increase its research on trade-related vulnerabilities and develop new financing mechanisms to assist those negatively impacted by trade reforms.
Nancy Alexander of Citizen’s Network for Essential Services highlighted several contradictions in the IFIs work on trade. Firstly was the contradiction between trade ministers having to concede reforms in bilateral negotations with the Bank and Fund (which hurt their negotiating stance in the WTO) and then having to turn to the IFIs for supposedly building their capacity. Secondly, she argued that these concessions to the Bank and Fund “went well beyond WTO requirements”. Finally, she pointed to the double standard whereby policies which are frowned upon for the weak are permitted for more powerful countries such as India.
Sony Kapoor of Christian Aid said that the “benefits of the Doha round have been greatly over-exaggerated”. The negative impacts in terms of agriculture, employment and industrialisation, had been underestimated. Government revenues had not recovered from the loss of tariff revenues resulting from liberalisation, said Kapoor, “resulting in spiralling aid dependence, increased debt and a decline in terms of trade”.
During the question and answer period, Dadush insisted that “from inside the Bank there has been no discussion of trade conditionality”. “It saddens me”, he continued, “that some of you are fighting the battles of twenty years ago.” Alexander responded that evidence from her recent study of the use of trade conditionality contradicts these assertions, and that the use of “soft conditionality” in the trade area is, in fact, on the rise.
On the question of the loss of trade tariff revenues, Lankes and Kapoor engaged in duelling interpretations of Fund research. Lankes insisted that the Fund paper “gets misquoted” saying that those poor countries which have attempted to replace the lost tariff revenues have been able to do so. Kapoor shot back that the Fund research was clear that the loss of revenue was irrespective of attempts to bolster value-added tax collection systems.