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EXECUTIVE SUMMARY
The trade, aid and finance communities are developing more coherent strategies to help developing countries integrate with the global economy. These guidelines provide a common reference point for these efforts. They also show how donors can help developing countries build their capacity for trade.
Trade capacity building enhances the ability of partner country policy-makers, enterprises and civil society actors to:
- Collaborate in formulating and implementing a trade development strategy that is embedded in a broader national development strategy.
- Strengthen trade policy and institutions -- as the basis for reforming import regimes, increasing the volume and value-added of exports, diversifying export products and markets and increasing foreign investment to generate jobs and exports.
- Participate in -- and benefit from -- the institutions, negotiations and processes that shape national trade policy and the rules and practices of international commerce.
Five premises
One: Trade and its liberalisation can contribute to development. Trade and trade liberalisation are not ends in themselves. Nor are they sufficient to generate dynamic and sustainable development on their own. But they can enhance a country's access to a wider range of goods, services, technologies and knowledge. And by stimulating the entrepreneurial activities of the private sector, they can create jobs, foster vital "learning" processes, attract private capital flows, increase foreign exchange earnings and generate resources for sustainable development and the alleviation of poverty.
Two: Developing countries want to integrate with the global economy. Beneficial integration with the global economy requires a major and comprehensive effort at further reforms -- and more effective participation in the rule-making and institutional mechanisms that shape the global economy. Ensuring that this integration is consistent with sustainable human development is a key challenge for partner countries and for donors.
Three: The new global economic context offers promising opportunities but poses daunting challenges. The increasing complexity of global markets, the new challenges of the multilateral trading system and the competing demands of regional, bilateral and multilateral trade agreements confront developing countries with an expanding array of competitiveness and policy challenges. Yet, they frequently lack the institutional and human resource capacity to meet these challenges.
Four: Trade policy-makers have a major stake in strengthening the trade-related capacities of developing countries. It is in the interest of OECD countries that developing countries overcome trade capacity gaps, negotiate effectively, implement trade agreements and meet continuing obligations under those agreements. Trade-related capacity building offers a valuable tool for meeting the challenge to the MTS posed by the ongoing concerns and disputes over trade and labour -- and trade and the environment.
Five: Donor support can strengthen the multilateral trading system by addressing the trade challenges facing developing countries. Governments have pledged in recent months to strengthen the Integrated Framework, and heads of state at the last two G-8 Summits called for enhanced capacity building for trade and improvements in its delivery.
Putting in place an effective policy framework for trade
One of the main objectives of trade capacity building is to help developing countries put in place sustainable trade policy frameworks and processes. Indeed, the record suggests that no country has achieved substantial gains in trade without an effective trade policy framework. Any such framework will be constructed, of course, from discrete institutions and arrangements, each needing attention from developing countries and donors. But all efforts should be guided by a vision to mainstream a comprehensive trade development strategy in a broader national development and poverty reduction strategy.
A sound trade policy framework and process will: help developing countries address a wide range of trade-related challenges and opportunities over an extended period; facilitate genuine local "ownership" of trade development efforts; reduce the risk that the trade policy priorities of donors will influence developing country trade policies; and enable developing countries to sustain and upgrade trade-related capacities after donors have departed.
Elements of an effective trade policy process
Although it is not possible to recommend a single policy framework that is ideally suited to promoting trade, recent capacity-building efforts point to several features or arrangements that have tended to promote success. Donors and developing countries should seek to construct trade policy frameworks with the following elements:
- A coherent trade strategy that is closely integrated with a country's overall development strategy.
- Effective mechanisms for consultation among three key sets of stakeholders: government, the enterprise sector, and civil society.
- Effective mechanisms for intra-governmental policy co-ordination.
- A strategy for the enhanced collection, dissemination, and analysis of trade-related information.
- Trade policy networks, supported by indigenous research institutions.
- Networks of trade support institutions.
- Private sector linkages.
- A commitment by all key trade stakeholders to outward-oriented regional and global strategies.
What this means for donors
- Co-ordinate trade capacity building efforts much more closely. The institution-building to leave behind a sustainable trade policy framework is beyond the means of any single multilateral or bilateral donor. Such a policy framework cannot operate effectively if the institutions and arrangements constituting it are assembled (or strengthened) independently. The complexity of this development co-operation agenda demands a significant measure of donor agreement on the objectives, a sequencing of activities and a division of labour. And by co-financing a trade policy framework, donors will also conserve funds, share risks and leverage their investments.
- Ensure that trade capacity building activities are comprehensive in scope and integrated in execution. Assembling viable trade policy frameworks will require action in many areas by many stakeholders, and efforts in one area must be implemented jointly with efforts in others. That will help partner countries to assess priority needs -- and donors to identify and co-ordinate priority interventions.
- Foster local ownership and participation in all trade-related development co-operation activities. Local participation and consultation -- among stakeholders, within governments, across regions -- define an effective trade policy process. By helping developing countries build such a process, donors will take a major step toward ensuring that development co-operation initiatives are locally owned and driven by demand. An effective trade policy process will also minimise the long-term risk that the trade or commercial interests of donors will conflict with those of their partner countries.
- Embrace approaches that strengthen the ability of partner countries to continue helping themselves once donors have left. When the focus of development co-operation is on the construction of a trade policy framework, the necessity that donors find ways to build sustainable capacities becomes self-evident. "One-off" initiatives -- in which foreign technical experts spend weeks or even months in a country but leave little expertise behind -- should be avoided. And in staffing projects, donors should rely on local talent as much as possible.
- Strengthen donors' own trade-related capacities. Donors need to enhance their range of skills and knowledge. Expertise in building institutions (public, private and hybrid) and consultative mechanisms will be especially important. So will that for nurturing policy and support networks. In addition, strengthening stakeholder consultation and policy co-ordination will require better facilitation skills, especially in the field -- and greater understanding of multilateral and regional trade issues. Donors would also benefit from more systematic exchanges of information on each other's programmes and experiences, perhaps using a dedicated Internet Website.
- Commit significant financial and personnel resources to build trade policy frameworks in developing countries -- with the prospect of substantial returns. Helping to build a trade policy framework in a country where none has existed before will require long-term donor commitments and sustained effort by many talented officials. The long-term cost effectiveness of such an effort will be much higher than that of an ad hoc approach that fails to create self-sustaining trade policy processes. But as enduring capacities are built, donors can gradually recede.
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