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With the emergence of new sources of competition, accelerating technological change and shifting societal concerns, adjusting to globalisation is an issue of concern to both developed and developing countries. The relationship between trade and structural adjustment has many dimensions. While restrictive trade measures can be both a barrier to adjustment and a cushion for adjustment, liberal trade policies and trade capacity building can also be an integral part of a successful adjustment process.
Against this backdrop, OECD conducted a study on “Trade and Structural Adjustment” to identify for both developed and developing countries the requirements for successful trade-related structural adjustment via the reallocation of labour and capital to more efficient uses, while limiting adjustment costs for individuals, communities and society as a whole.
The study was developed from a Swedish proposal made at the OECD Ministerial Council Meeting (MCM) in 2003 and was launched as a horizontal project after deliberations in relevant subcommittees receiving a grant from the government of Sweden. Eight sectors were chosen for particular attention: agriculture, fisheries, textiles and clothing, steel, shipbuilding, motor vehicles, health services and international sourcing of IT and business process services.
An OECD Global Forum on Trade was held in November 2004 in Bangkok, Thailand, to bring together experts from OECD and non-OECD countries to discuss and to provide input on the issue of “Trade and Structural Adjustment”, with special emphasis on the challenges faced by the motor vehicles and textile/apparel sectors. Subsequently, in February 2005, an initial draft of the final report to the MCM was discussed by technical experts at a technical workshop held in Paris.
The key findings of the Trade and Structural Adjustment Project (TASAP) were reported at the MCM in 2005. The findings have also been presented at other fora such as the OECD Tokyo Forum. This OECD Study has been published as a publication titled “Trade and Structural Adjustment: Embracing Globalisation".
Based on discussions at the MCM, it was agreed to launch an extensive “horizontal” follow up: Globalisation and Structural Adjustment Project.
A sectoral follow up study in coffee, tobacco, telecommunications and chemicals was conducted in 2005-2006. It draws policy implications on:
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benefits of multilateral commitments,
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government role in domestic reform (e.g. licensing) and state ownership, subsidies and facilitation of information flows,
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sequencing through analysis of the tobacco, coffee, telecommunications and chemical sectors.
A further follow-up study on trade-related adjustment in non-member economies reassessed the applicability of the policy recommendations in the Trade and Structural Adjustment report to developing countries. The recommendations were generally reaffirmed except on the issue of social safety nets and labour market policies. Considerable care is necessary to take into account the difference in the policy environment in each country.
Analyses point to the crucial importance of export response in the initial phase of trade reform. Policies to provide access to competitively priced intermediate goods and services, capital, and market information as well as appropriate exchange rates can facilitate export response.
The Doha Development Agenda, and various regional and bilateral free trade initiatives can contribute to structural adjustment in developing countries undertaking trade reforms, by providing the access to markets that can contribute to inducing export response.
The study consists of an overview paper and five background studies:
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Country case study on Chile
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All papers have been issued as OECD Trade Policy Working Papers.
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