Policymakers in past generations may have thought
it was possible to treat trade and development as if
these were distinct functions. Trade dealt principally
with the external sector, whereas development was
seen as a largely domestic phenomenon. Decades of
experience have worked from two directions to erase
this distinction. On the trade side, the expanding scope
in the subject matter of negotiations and disputes
has led policymakers to realize just how far this topic
overlaps with other fields of public policy. On the
development side, countries that have placed great
emphasis on promoting exports have generally done
much better than those countries whose strategies
have entailed the substitution of imports with domestic
production. Far from being distinct fields of public
policy, it is now widely acknowledged that these two
areas are integrally related to one another.
One of the chief tasks of a TPF is to promote the
mainstreaming of trade policy into development policy,
and to highlight those ways in which the two fields are
intimately tied. Much more than an extended mission
statement for a trade ministry, a TPF should ideally
identify the areas in which the country may expand
its capacity for production and trade, as well as the
obstacles that it must overcome in order to achieve
that end.
A. MAGNITUDE AND SCOPE OF
TRADE
Trade policymaking is more complex and important
now than it was in past generations because trade itself
has changed both quantitatively and qualitatively. The
share of trade in national economies has grown, and
the scope of issues that fall within trade negotiations
has widened considerably.
Even in its most traditional and narrow definition, trade
is more important today than it was a generation ago.
The globe was becoming steadily more trade intensive
during the quarter century that preceded the financial
crisis of 2008–2009, as can be seen from the data in
figure 1. Whereas in 1985, trade accounted for about
15–20 per cent of typical countries’ GDPs, by 2008,
it generally exceeded 30 per cent . This point held true
for countries at all levels of economic development,
even if the shifts from one year to the next were more
volatile for the least developed than they were for the
higher-income countries. The path since the financial
Figure 1. Shares of GDP in economic sectors, 2013 (Value-added as a percentage of GDP)
Source: Agricultural value-added as a percentage of GDP based on World Bank data at http://data.worldbank.org/indicator/
NV.AGR.TOTL.ZS; services value-added as a percentage of GDP based on World Bank data at http://data.worldbank.org/indicator/NV.SRV.TETC.ZS; services value-added as a percentage of GDP based on World Bank data at http://data.worldbank.
org/indicator/NV.IND.MANF.ZS.
“All other” calculated by the author as the residual. Note that data on all countries are included in this figure; developed and
oil exporting countries are not excluded.
75
60
45
30
15
0
Least developed
Agriculture Manufactures All other Services
Middle income High income
10 TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES
crisis has been unsteady. The trade intensity of national
economies seemed to be recovering immediately after
that crisis, but the last few years have witnessed the
stagnation of trade in the high-income countries and a
decline for the developing countries. It is too soon to
know whether this post-crisis downturn represents a
temporary setback or the emergence of a new pattern,
but either way, it speaks to the need for countries to
redouble their efforts to engage in mutually beneficial
exchanges of goods and services.
The qualitative changes in the field of trade have been
even more consequential. Trade policymaking may be
defined as the development and execution of national
laws and policies, as well as international agreements
and initiatives, that are variously intended to facilitate,
promote, prohibit, tax or regulate the cross-border
movement of tradeables.
That basic definition can
be applied to any country and any period of history,
but the scope of its meaning has changed over time.
The tasks and jurisdiction of a trade ministry in 1980
were little different from what they had been in 1880;
in both periods, the chief focus was on tariffs and
other border measures affecting the movement of
goods. Following a generation of sweeping changes
in the shape and scope of the trading system, and
also in the larger world to which that system belongs,
the responsibilities assigned to trade ministries are
radically different today. That can be seen both in the
range of issues that are defined to fall within the scope
of trade negotiations and in the importance attached
to the removal of domestic constraints. Put another
way, trade ministries used to spend much of their
time trying to identify and overcome the major barriers
that other countries deliberately imposed on imports
of goods, but today they must devote at least as
much attention to addressing the interior barriers that
their own country faces or even imposes (however
inadvertently) on the production and export of goods
and services.
The expanded issue base of trade policy can be
traced primarily to a redefinition of what is traded.
Until a few decades ago, the only recognized
tradeables were goods; trade meant only the
movement of goods across borders, and the only
available policy instruments were tariffs, quotas,
licensing requirements, outright prohibitions and
other measures that directly regulated exports and
imports of merchandise at the port of entry or exit. As
a consequence of technological changes and policy
reforms, trade policy now deals with the cross-border
movement of services, capital (i.e. investment), ideas
(i.e. intellectual property),
and even people (i.e. the
movement of persons as investors, managers, and
service providers). The actions that countries take
to promote their industries and the commitments
that they make in trade agreements also go beyond
and behind the border. Trade policy is now linked to
more issues affecting the production, distribution, and
use of goods (e.g. labour rights and environmental
protection), and to still others in which the relationship
is controversial and determined by politics (e.g.
foreign policy and human rights). The subject matter
of trade is not just arithmetically larger, as the widening
scope means that the domestic and international
politics of trade have grown geometrically more
complex. Functions that could once be performed
by a small cadre of tariff specialists now require not
only a more highly trained and professional corps of
trade negotiators, but also the effective support and
participation of other domestic institutions that have
jurisdiction and expertise in other, more esoteric areas
of public policy.
