Trade and Trade Policy A Manual for Parliamentarians in Commonwealth Africa Dr Massimiliano Calì, Overseas Development Institute Regional Workshop for East African Parliamentarians Arusha, 27-8 May 2010

Why produce a Manual?  The effects of trade permeate through an economy – as does the impact of change to:  supply and demand on the world market;  a country’s trade policy;  other countries’ trade policies.  But the effects:  flow along multiple channels; and  are often complex and indirect.  So it is often hard to track the impact on any particular individual or socio-economic group. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa2

What’s in it for Parliamentarians?  Parliamentarians are central to the regulation of trade because the decisions are inherently political:  they create winners and losers;  they require wide consultation if they are to be implemented effectively;  they affect tax – and hence also expenditure; and  trade policy must reflect a country’s development strategy.  There is plenty they can do:  governments have only a few instruments that directly channel trade; but  many policies can influence the short- and long-term impact of trade on development;  most of which fall outside the trade portfolio.  Mainstreaming trade policy is essential to reinforce desirable, and minimise negative, effects. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa3

Scope of the Manual  The Manual moves from underlying questions to trade policy formulation.  The chapters deal in turn with:  why, and what, to trade;  what lessons can be learned from the experience of the fastest-growing states;  how can governments:  influence the impact of trade on their citizens;  shift their country to a more dynamic trade pattern, given that: it is the private sector that does most trading; many key forces affecting poor countries are outside direct control.  How can these insights be brought to bear in actual trade policy negotiations:  multilateral (Doha);  African regional groups, Economic Partnership Agreements (EPAs)?  What special role do Parliamentarians have to play in this process? Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa4

There are no short cuts  The experience of recent decades has challenged much conventional wisdom:  trading manufactures is not ‘good’ and primary products ‘bad’ for development – it all depends on which goods (and services);  there is a role for both ‘the market’ and ‘the state’ – it is the ‘way’ they operate that counts;  regional trade agreements can foster growth, but they may also hinder it.  The ‘big message’ of the Manual is that detail matters:  the detail of trade agreements;  the market niche in which a country trades;  the place of a national firm in its global value chain.  Which poses a challenge for Parliamentarians:  to master the detail;  to communicate it to the electorate. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa5

Tools for African Parliamentarians  The Manual provides the tools to be applied to many current trade policy questions:  Doha:  what are Africa’s interests;  what are the implications of further delay in completion?  EPAs:  what are the implications for pre-existing African regional groups;  how should governments respond to the revenue challenges?  Global Financial Crisis:  how Africa is affected;  what is needed to make countries less vulnerable to ‘collateral damage’? Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa6

Some key messages  Politics and communication are at the heart of trade policy – Parliamentarians’ input comes at every stage.  Trade policy:  should reflect national economic priorities, which requires that  it must be translated into a set of negotiable points.  Mainstreaming trade policy is vital: without it negotiators are operating in a vacuum.  Tariff liberalisation always has distributional impacts:  either fiscal expenditure will go down (through spending cuts); or  other taxes will need to increase – with a different incidence from the old taxes.  Parliamentarians need to push for Aid for Trade: so far provision has been underwhelming. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa7

Trade and Trade Policy A Manual for Parliamentarians in Commonwealth Africa Dr Massimiliano Calì, Overseas Development Institute Regional Workshop for East African Parliamentarians Arusha, 27-8 May 2010