Trade Policy Note Final-rev08 - Development

Export duties can also be an element of an industrialization strategy, by ensuring
supplies of lower cost raw material inputs for domestic industry 25 .
Box 10: Mongolia - Removal of export restrictions and taxes
Mongolia was obliged to eliminate its export restrictions and phase out its export duties on
raw cashmere under its terms of accession to the WTO. As a result, raw cashmere is now
exported to China and the cashmere processing sector has all but disappeared. 26 It is estimated
that if all raw cashmere produced in Mongolia were fully processed into finished knitted and
woven products before export, such exports would generate $206 million in reserve, more
than all T&C exports. Moreover, employment in the processing industry would more than
double. 27 On the other hand, the poor herders were able to obtain higher prices for their raw
cashmere from Chinese buyers who required the longer Mongolian fibres to improve the
quality of their fabric.
Services and Industrial Policy
The services sector should also be seen as relevant to industrial policy. For some
countries, it will simply make little sense, at least in the short-term, to develop a
manufacturing sector. In such cases, priority should be given to the development of a
dynamic non-manufacturing sector (eg. tourism).
Energy services will also be central to industrial policy, especially the ability to
provide energy domestically at rates less than those prevailing on the world market.
The Doha Round is the first time that energy policy has been seriously addressed in
multilateral trade negotiations, covering subsidies, export restrictions and taxes,
energy services, trade and environment and domestic excise taxes. 28 Concessions on
energy policy have been made by countries acceding to the WTO.
However, a wide range of TRIMs are still permitted including transfer of technology
and export performance requirements (see Section VII). Moreover, performance
requirements are encouraged for developing countries as a means of acquiring
technology or access to information networks and distribution channels in the services
sector (see Section VI), even though some acceding countries have agreed to
eliminate certain TRIMs and performance requirements that would otherwise have
been permitted by the WTO.
25 Under the WTO export duties have the same status as import duties, they are limited only to the
extent that they have been bound in multilateral trade negotiations.
26 See Tsogtbaatar, Damedin, Mongolia’s WTO Accession: Expectations and Realities of WTO
Membership (www.wto.org/English/res_e/booksp_e/casestudies_e/case29_e.htm).
27 See Adhikari, Ratnakar and Yumito Yamamamoto, “Sewing Thoughts, How to Realize Human
Development Gains in the Post-Quota World ”, UNDP Asia Pacific Trade and Investment Initiative,
April 2006 (www.undprcc.lk/Publications/Publications/TC_Tracking_Report_April_2006.pdf).
28 See Gibbs, Murray, Energy in the WTO: What is at stake?, in Sieh Mei Ling ed. Investment, Energy
and Environmental Services: Promoting Human Development in WTO Negotiations, University of
Malaya, UNDP, and Malaysian Institute of Economic Research, Kuala Lumpur, March 2004,
(www.um.edu.my).
25