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

2 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

3 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

4 CountriesReform s led by Reform PeriodsKey features KenyaWB, 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 TanzaniaWB, IMF Reforms began in 1980s, SAP in 1990s Average tariff reduced to 12%; privatisation; FE restrictions relaxed; agricultural subsidies removed; export duties removed; devaluation UgandaWB, IMF 1 st phase from 1987; 2 nd phase from 1995 Trade liberalisation; privatisation; FE restrictions relaxed; agricultural subsidies and price support removed; devaluation; SOE marketing Boards liberalised ZambiaWB, 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

5 Tariff Reduction in African TDP Countries CountriesPre WTO tariffsPost WTO tariffs% tariff lines with 15%+ MFN duties Kenya43.7 (1990)15.3 (2000)40.8 South Africa12.7 (1988)8.5 (1999)21.1 Tanzania29.7 (1990)17.9 (2001)40.7 Uganda19.9 (1987)8.2 (2001)40.8 Zambia29.9 (1987)6.8 (1999)33.2 Source: Author’s compilation from TDP country studies and from WTO, 2006, World Trade Profiles CountrySector Studied KenyaTextiles, Telecommunications South AfricaTextiles, Tourism TanzaniaTextiles, Fisheries UgandaDairy, Maize ZambiaTextiles, Agro-processing Sectors studied in African TDP Countries Source: TDP Volume 2

6 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

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 7

8 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

9 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.

10 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

11 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

12 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

13 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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