Transcript No Slide Title

The Integrated Framework Diagnostic
Trade Integration Study for
Cambodia: a team leader’s
perspective
Presentation prepared for:
EU-LDC Network Conference 2002
Improving Global Governance for Development:
Issues and Instruments
Chiang Mai Sports Club, Thailand
8-10 December 2002
Sandy Cuthbertson
Centre for International Economics
Australia
Bionote
Sandy Cuthbertson is a Senior Associate at
the Centre for International Economics
(CIE), Canberra office.
He was a team leader for the Integrated
Framework Diagnostic Trade Integration
Study in Cambodia and is team leader for
the DTIS in Yemen.
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A brief history
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The Integrated Framework Program (IF)
was initiated in 1996 to promote the
integration of LDCs into the global
economy. Participating agencies are the
WTO, IMF, World Bank, UNDP, UNCTAD
and ITC.
Progress was initially slow and a review
completed in 2000 referred to the need for
stronger linkages to overall development
strategies and the lack of donor resources.
In July 2000 a Heads of Agencies meeting
redefined the Integrated Framework.
Through 2000 and 2002 the ‘new’ IF has
been active in 8 countries
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Main features of the ‘new’ IF
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Better integration of trade with national
development strategies including PRSPs.
Stronger funding with establishment of a
trust fund which currently has 18 donors
and $9.1 million pledged.
Management structure expanded to include
agencies, bilateral donors and LDC
representatives.
Diagnostic Trade Integration Studies
(DTIS) established as a first step in an IF
program covering:
 global market access
 trade in services
 regulatory framework
 trade facilitation (customs, transport)
 sector specific analyses
 trade and poverty
 prioritised TA needs and policy reform
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Activities through 2001...
Missions to
Madagascar and
Mauritania
Missions to Cambodia
Three reports
completed
National Workshops
in Cambodia and
Mauritania
Work initiated in
Lesotho, Malawi,
Senegal and Yemen
Mission to Senegal
July
Aug
Oct
Nov
Dec
Jan
Feb
2001
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…and 2002...
Missions to Lesotho
Missions to Malawi
Mission to Yemen
Work initiated for
Burundi, Guinea,
Ethiopia, Eritrea and
Nepal Completion of Yemen,
Senegal, Lesotho and
Malawi reports
Mission to Nepal with
mission proposed for
Ethiopia, Eritrea, Guinea
and Burundi in 2003
Mar
Apr
May
Jun
July
Aug
Sep
2002
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Some lessons of the 1980s and
1990s for origins of ‘new’ IF
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LDCs have liberalised trade - with average
nominal unweighted tariffs falling from 40
per cent to 15 per cent between 1980-85
and 1996-98
While some countries have done very well,
in others growth rates have been only fair pointing to behind the border constraints
limiting supply response.
Trade and investments between people in
developed countries happens relatively
smoothly - when trade barriers are reduced
- because of converging and long
established institutions.
Institutional arrangements in many LDCs
are often quite different from those norms.
Behind the border institutional and
production capacities now matter more than
conventional trade barriers - need for an
economy-wide approach
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Some lessons of the 1980s and
1990s for origins of ‘new’ IF
(continued)
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Policy durability requires government
commitment which in turn requires public
understanding and mandate
Lots of donors and sources of advice and
limited capacity to assess and manage
development cooperation
WTO membership:
 accession activities complex and
administratively demanding
 accession requirements sometimes seen
as an imposition
Need for countries to have systems
information and processes to assess
policies in terms of their economic and
social impacts and not just in terms of WTO
consistency
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‘In principle’ questions about
Integrated Framework as a response
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Does the Integrated Framework imply a
centralised approach to development
cooperation?
Why not have competition among sources
of advice and providers and users of
development funding?
How well would competition work if these
providers and users are not subject to
market discipline?
Is one role of Diagnostic Trade Integration
Studies to inform the market for such
competition?
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Cambodia experience
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Proposed by World Bank Regional Office as
team leader. Met with Cambodian
colleagues in July 2001; working with focal
point put together terms of reference and
team
TOR made to splice in with Government
blue print presented to donors in early 2001
entitled The Tokyo Road Map
Fieldwork started in August and working to
a tight deadline report circulated in two
languages for a National Workshop in
November 2001.
Cambodia exercise distinguished by:
 close involvement of Government
through Minister and Secretary of
Ministry of Commerce
 MOC leaders, through their energy
competence and commitment,
established themselves as bosses and
partners. And agencies encouraged this
to happen.
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Cambodia experience (continued)
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Team members were encouraged by MOC
to offer independent professional advice
Obviously with the benefit of hindsight could
have done some things better:
 more interviews and observation in the
country-side
 wider circulation of Cambodia language
material
 closer links with PRSP process
 more liaison with other development
groups
 better specification of technical
assistance
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Selected issues
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Accession to WTO well advanced and
important but the DTIS identified a need to
build domestic capacities and processes to
assess and develop policies on merit and
not simply in terms of WTO requirements
Many Cambodians produce and consume
rice. For producers, removal of barriers to
exporting would raise welfare. But
consumers could lose. The overall effect
depends on the composition of household
expenditures and revenues. Analysis of the
impact of a rise in export demand suggests
that most people would benefit - the very
poor and the very rich would lose.
Many Cambodians also consume and
produce (catch) fish. Exports of fish were
controlled by a singe state owned company.
This intervention imposed a significant tax
on fish exports but raised little for general
revenue
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Selected issues (continued)
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The benefits of preferred access to garment
markets in the EU and US largely dissipated
in rules of origin requirements and labour
standards. Employed labour benefited from
higher wages while people who would be
prepared to work for lower wages lost out.
Restrictions on overtime and like standards
benefit hardly anyone
Supply bottlenecks rather than market
access is the major constraint to trade
development.
Importance of institutions covering such
things as secure property rights,
enforceable contracts and supporting
voluntary exchange well recognised in
Cambodia
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After the DTIS
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In June the Government released a paper
entitled Implementing the Integrated
Framework in Cambodia
Report focussed on:
 building domestic constituencies
 trade strategy and trade mainstreaming
 trade and investment linkages
 WTO membership
 capacity building
 on-going and emerging technical
assistance activities
This report reaffirmed the Government’s
determination to:
 own the process
 work with the IF team as partners
 to establish processes for the focal point
and the team to interact with key policy
makers and stakeholders
 establish rule of law
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Afterthoughts
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Attractive features of IF process include:
 Government in the driver’s seat
 economy-wide approach
 provides opportunity to make full impacts
of policies transparent
 flexibility to consult widely
 independent and professional advice
 forum for main agencies to work together
Difficulties include:
 managing complex processes with large
number of people involved in a short
time
 need to work in local language
 distilling wide coverage to a few priorities
Effectiveness requires:
 Government to be in charge
 follow-up
 open processes for policy development
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