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SYNTHESIS OF DOHA ROUND IMPLICATIONS:
LESSONS FROM
TRADE-DEVELOPMENT-POVERTY LINKAGES STUDY
Pradeep S Mehta,
Secretary General, CUTS International
UNECA Expert Group Meeting and Workshop
On
Enhancing Africa’s Participation in the WTO’s Negotiations Process
7 September 2009, Nairobi, Kenya
PRESENTATION PLAN
• Introduction to the TDP Project
• Some statistics
• Lessons from the TDP Project based on some stylised facts
from SSA country experiences
• Lessons that feed into the negotiations
• A post-script on the FEATS Project
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INTRODUCTION TO THE TDP PROJECT
• Trade, development and poverty reduction experiences from
thirteen developing countries capturing macroeconomic
impressions as well as sectoral studies
• Five of the thirteen from Africa – Kenya, South Africa,
Tanzania, Uganda and Zambia
• No one size fits all, and success of trade liberalisation in
bringing about development and poverty reduction depends
upon ownership by national stakeholders and supply side
management, especially through flanking measures
• More details at http://www.cuts-citee.org/tdp/index.htm
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Countries
Reform Reform Periods
s led by
Key features
Kenya
WB,
IMF
SAP from 1980,
more reforms
from 1986
QRs removed; tariffs reduced from 49% to 17%;
removal of agricultural subsidies; privatisation; FE
restrictions relaxed; FDI promotion
South
Africa
IMF,
WTO
Began in early
1980s
QRs removed and tariffs bound; fiscal austerity;
tariff reduced by one-third on joining WTO; export
subsidies removed; privatisation
Tanzania
WB,
IMF
Reforms began
in 1980s, SAP in
1990s
Average tariff reduced to 12%; privatisation; FE
restrictions relaxed; agricultural subsidies removed;
export duties removed; devaluation
Uganda
WB,
IMF
1st phase from
1987; 2nd phase
from 1995
Trade liberalisation; privatisation; FE restrictions
relaxed; agricultural subsidies and price support
removed; devaluation; SOE marketing Boards
liberalised
Zambia
WB,
IMF
Sustained
reforms from
1990s
Tariff slabs reduced to four, maximum tariff reduced
substantially; QRs removed; privatisation
Source: Complied from TDP Project country background papers
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Tariff Reduction in African TDP Countries
Countries
Pre WTO tariffs
Post WTO tariffs
% tariff lines with
15%+ MFN duties
Kenya
43.7 (1990)
15.3 (2000)
40.8
South Africa
12.7 (1988)
8.5 (1999)
21.1
Tanzania
29.7 (1990)
17.9 (2001)
40.7
Uganda
19.9 (1987)
8.2 (2001)
40.8
Zambia
29.9 (1987)
6.8 (1999)
33.2
Source: Author’s compilation from TDP country studies and from WTO, 2006, World Trade Profiles
Sectors studied in African TDP Countries
Country
Sector Studied
Kenya
Textiles, Telecommunications
South Africa
Textiles, Tourism
Tanzania
Textiles, Fisheries
Uganda
Dairy, Maize
Zambia
Textiles, Agro-processing
Source: TDP Volume 2
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LESSONS FROM TDP– I
[Trade-growth linkages]
• No evidence of steadily growing significance of the export
sector during the post-liberalisation period
• Vibrant agriculture sector essential for poverty reduction
– Industrial exports from Uganda and Zambia declined or stagnated
despite reforms
• No revealed negative association between tariffs and overall
economic activity
– More open Kenya versus Vietnam ( growth of 2% versus 7.3%)
• Export expansion depends upon domestic support, as in the
case of Tanzanian fisheries
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LESSONS FROM TDP– II
[Need for flanking policies]
• Liberalisation unaccompanied by flanking policies may
actually deepen poverty
Example: dairy and maize sectors in Uganda
• Trade adjustment creates winners and losers: need to
understand distributional consequences
• Initial distribution of endowments crucial for poverty
reduction.
• Obstacles to exploitation of positive synergies
– Supply side constraints: lack of flanking policies and
regulatory reforms
– Demand side constraints: NTBs (TBT, SPS), poorly chosen
trade preferences, inadequate mode 4 access
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LESSONS FROM TDP – III
[Trade-Growth-Poverty Linkages]
• Ground level complexities constrain exploitation of positive
synergies among growth, export expansion and poverty
reduction
– Countries like Tanzania and Zambia trapped into slow growth and
poverty reduction
• Policy space crucial -- availability and use
• Ownership of the policy regime matters
– Vietnam did better than Kenya with similar regime but much more
ownership
• Governance, facilitated adjustment and monitoring and
evaluation are other important factors
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LESSONS FROM TDP
[Essence]
• Trade liberalisation is potentially beneficial for both
economic development and poverty reduction but the
potential needs to be harnessed through:
a) local ownership of reforms
b) supply side capacity enhanced and buttressed by presence
of flanking conditions ( good infrastructure, effective trade
facilitation, social safety nets and effective competition
regime)
c) liberalisation that takes into account difference in sectoral
realities and is therefore selective in emphasis.
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TDP FEEDING INTO DDA – I
[Market access]
• Tariff liberalisation commitments may not translate into
economic growth or poverty reduction automatically
• Lowering of tariff peaks, tariff escalation and grant of
preferential tariffs in sectors of interest by negotiating
partners could lead to potential market access opportunities
• Service sector market access, particularly mode 4, could
bring potential gains
• Additional market opening in agricultural products can
bring significant opportunities
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TDP FEEDING INTO DDA – II
[Subsidies and Standards]
• Real reduction of agricultural subsidies by developed
countries can open markets for developing country
products
• Rules for reigning in high and changing standards in
developed markets can make market access more
predictable for developing countries
• Simpler rules of origin, particularly preferential ones,
could make preference schemes work better
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TDP FEEDING INTO DDA – III
[Homework]
• Addressing supply side constraints crucial to success in
leveraging market access (hard infrastructure)
• Property right reforms, capacity enhancement, better
regulation equally crucial (soft infrastructure)
• Agricultural policies aimed at diversification, value addition
and facilitation of standardisation important for SSA
• All this can be factored into SSA responses to the AfT
discourse
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Postscript – Some lessons from the ongoing
CUTS FEATS Project
• Governance, policy coherence, mainstreaming trade into
national development strategies and plans important
• Increased stakeholder awareness and involvement in policy
debate, and better oversight by parliamentarians essential
for generating a sense of policy ownership
• Better consultative mechanisms, information flows and
feedback loops for stakeholders needed
• The three most important sectors for SSA are agriculture,
agriculture and agriculture
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