Trade policymaking is a challenging task in all
countries and presents especially great difficulties
for officials in developing countries. What may seem
at first to be a purely external exercise is intimately
related to development policy as a whole and
involves a series of domestic trade-offs. To make
policy in this field, the interests of consumers and
producers must be balanced while the goals of the
most efficient and export-oriented industries must
be weighed against those that are still struggling to
achieve competitiveness. When deciding what kinds
of activities they will tax or incentivize, or what trade
agreements they are prepared to negotiate, and what
sort of tariff concessions they are willing to make,
policymakers have always had to reconcile the fiscal
needs of the treasury with the potential for job creation.
Matters have become more complicated with the
ever-widening range of issues that are brought to
the negotiating table and by the proliferation of those
tables. The many demands that are made upon
trade policymakers in this new environment dwarf
the problems that their predecessors once faced,
being technically more complex and politically more
intractable.
Just as no smart traveller would go on a journey
without a road map, policymakers in this field are
well advised to have a reasoned plan that guides
their actions. A trade policy framework (TPF)
offers
a structure for the many decisions that a country’s
negotiators, legislators, and litigators must make as
they devise and implement policy. The aims of a TPF
are to reveal the principal challenges that a country
faces in its trade policy, prioritize its objectives, and lay
out a plan to achieve those goals. A country’s decision
to seek assistance in the development of a TPF is
most commonly triggered by the realization that it has
been underperforming its expectations in the external
sector and that assistance is needed to identify the
bottlenecks and propose ways to break through
them. The United Nations Conference on Trade and
Development (UNCTAD) provides technical assistance
to countries in the development of their TPFs.
A dozen such projects have been completed as
summarized in box 1, and they are also referenced
throughout this manual. In most cases, TPFs were
requested upon a Government’s recognition that
its existing trade and development policy was not
producing the intended results.
Among the most typical
problems that countries encounter is a negative or
deteriorating trade balance, a manufacturing sector in
which employment or capacity utilization is shrinking, or
the maldistribution of wealth. Whatever the underlying
cause, countries may hope that a more dynamic trade
policy can result in deeper and broader development.
TPFs are tailor-made to meet the needs and challenges
of the specific countries under examination, with the
conclusions and recommendations varying according
to the needs and circumstances of the countries in
question (see box 2).
Box 1. Inspirations for trade policy frameworks
TPFs produced thus far have each responded to perceptions of shortcomings in the existing trade strategies of the
countries under examination. Starting from the recognition that a problem exists, they each turned to a detailed diagnosis
and then — as discussed in box 2 — the development of policy prescriptions.
Much of the TPF process grew out of the experience with Papua New Guinea . During the process of accession to WTO,
which concluded in 1996, policymakers in that country concluded that they lacked a coherent framework for the conduct
of trade policy. The technical cooperation that they received from UNCTAD in the years following that experience evolved
into the Papua New Guinea Trade Policy Framework, issued in 2006.
This precedent was built upon with several other developing countries. The Ministry of Trade and Industry of Rwanda
requested assistance from UNCTAD in 2008, following its acknowledgment of the country’s immense structural weaknesses.
The Jamaica Trade Policy Framework (2015) came about after the Government determined that trade had underperformed
for 20 years.
This poor showing was characterized by limited export growth, increased imports, reduced competitiveness
and continued dependence on a few goods.
Several TPFs were largely inspired by concerns over a country’s dependence on a single commodity and the need for
diversification. The TPF for Algeria points to dependence on hydrocarbons as a root cause for both low growth and the
steady decline of manufacturing from 15 per cent of GDP in the mid-1980s to just 5 per cent. The TPF for Zambia began
with the recognition that the country is overly dependent on copper exports. The drawbacks of that dependence were
less evident when copper prices were high, but even then the windfall was not shared throughout the economy. Similarly,
the TPF for Angola was inspired by concerns over dependence on oil and global price volatility, coupled with the special
problems of a conflict State.