STRUCTURE OF THIS
MANUAL
This manual takes a five-step approach to defining the
subject matter of a TPF and specifying the process by
which it should be prepared.
Part II places the larger issues in context by exploring
the evolution of the debate over trade and development,
presenting data on the rising level of trade in national
economies and the association between exports
6 TRADE POLICY FRAMEWORKS FOR DEVELOPING COUNTRIES: A MANUAL OF BEST PRACTICES
and success. It reviews the major strategic options
of developing countries, including the all-important
question of when countries ought to begin opening
their markets. The analysis contrasts the experiences
of successful economies that committed themselves
to liberalization at an early stage of development with
those of other economies that instead pursued a
two-stage trade strategy. Comparative data generally
confirm a close association between income and the
extent to which countries leave major decisions to the
market rather than the state.
Part III takes up tactical issues, focusing on the
instruments of trade policy. A TPF needs to identify
not only the tools that are available to the country’s
policymakers but also those that are employed by
its trading partners. The framework should consider
the types and levels of tariffs that are imposed by
the country and its partners, and how they might
be adjusted — whether autonomously or through
negotiations — to serve the country’s interests in
production and exports. The data show that there is
generally an inverse relationship between tariffs and
income, such that barriers tend to be lower where
incomes are higher, but this is not an absolute rule.
Beyond tariffs, countries also need to address a wide
range of issues that determine the costs of doing
business. These include the many procedures and
rules that affect the movement of goods, antidumping
and other trade-remedy laws, and the whole range of
laws and policies governing services, investment and
the protection of intellectual property rights.
Part IV takes on trade negotiations and trade
promotion.
One of the most important decisions
that a country faces in its trade strategy is whether it
aims to establish trade relations that are preferential
or reciprocal. For decades, developing countries
typically sought open access to the markets of their
developed trading partners while seeking to maintain
relatively high tariff and non-tariff barriers to their own
markets. Many countries still take this approach, but
others — where incomes are typically higher —
have
been willing to engage in reciprocal negotiations
through which they would achieve greater openness
in both directions. They often do so by simultaneously
engaging in multilateral initiatives and in RTAs. This
part reviews the costs and benefits of these different
negotiating forums, and also examines the challenges
that come in the implementation and enforcement of
trade agreements. This includes both the soft forms
of enforcement (e.g. transparency, notifications and
the like) and the hard option of the WTO’s Dispute
Settlement Body. The value of trade agreements can
also be multiplied through well-designed programmes
of trade and investment promotion.
Part V addresses the institutions of trade policymaking.
The first decision that any country must face in this
field is which ministry or other agency will be given
principal responsibility for this subject, a task that
might reasonably be assigned to the foreign ministry,
the finance ministry, or some other body. The analysis
reviews the arguments for each of these divisions
of labour. It concludes that there are trade-offs with
each of these options and that close coordination is
needed between different agencies of Government
and between the public and private sectors no matter
what institution takes the lead. It is also an area in
which officials often need assistance to build their
capacity and expertise.
Part VI identifies best practices in the preparation of
a TPF. In addition to laying out the principal steps in
the process, from the request for assistance through
the execution of a plan, this part argues that a TPF
should present an overall vision of where trade policy
fits in the country’s development strategy. A framework
needs to be owned by the country itself, and promoted
by a champion in the Government. It should clearly
identify the main objectives of trade policy, whether
they are conceived as inward-oriented, outwardoriented, or market-oriented. Other issues addressed
in this concluding part concern the timing of a TPF, the
attention devoted to internal and external constraints,
and the collection and analysis of data. Appendices
elaborate on these points by providing checklists of
issues to be addressed with respect to the country’s
characteristics and its strategy, the capacity of the
principal trade agencies, and the institutions in
Government and civil society that ought to be consulted
when devising, revising, and validating a TPF.
Part VII concludes with some final observations and
presents checklists that researchers may employ
when conducting a TPF.