Trade Policy Note Final-rev08 - Development

I. AIMS AND OBJECTIVES
This Policy Note addresses (a) how governments can provide a specific pro-poor and
pro-development focus to their trade policies in a manner that is supportive of MDG
achievement, and suggests (b) how they can pursue these goals in international trade
negotiations.
Background concepts, past and current debates
Trade policy can constitute a key tool for the achievement of the MDGs. Using trade
policy as an instrument of industrial diversification and the creation of value added
remains key. Moreover, exports of goods and services can provide increased incomes
for poor people, government revenue, opportunities for employment, including high
paid jobs abroad, particularly for women and young job-seekers. Exports can thus
contribute to the achievement of MDGs, by lifting people out of poverty (MDG1) and
empowering women (MDG3), while supporting MDG8, whose target 12 aims at a
trading system in which developing countries can extract greater benefit from the
international trading system.
However, the gains from exports ma y accrue to the richer segments of the population,
and export industries can damage the environment and otherwise undermine the
livelihoods of poor people. Imports of goods and services can crowd out domestic
producers, undermine livelihoods, exacerbate inequalities and push people into
poverty. At the same time, trade liberalization can bring vital capital and technology,
as well as essential inputs for improving infrastructures and increasing productivity,
including that of poor people.
All WTO members are taking part in the Doha Round of multilateral trade
negotiations, and most are actively engaged in the negotiation of Free Trade
Agreements (FTAs). In designing and pursuing a trade policy to achieve the MDGs,
developing countries face the constraints posed by the trade agreements that they have
accepted. The WTO Multilateral Trade Agreements (MTAs) are both extensive, i.e.
they discipline a wide range of policy areas central to development strategies, and
intrusive, i.e. they impose a detailed legal framework on national economic and social
policies. In addition, many developing countries have entered into regional and
bilateral, often extra-regional, FTAs which go beyond the WTO (“WTO plus”) in
terms of their scope and intrusiveness.
This new international trading system thus has the disadvantage of constricting the
policy space available for countries to pursue a development oriented national trade
policy. Nevertheless, this presents the opportunity for developing countries to press
for international trade rules and seek commitments on the part of their trading
partners that are supportive of their development goals - which is precisely what
MDG8 is intended to achieve. However, this requires that developing countries are
able (a) to define such goals in their national policies, and (b) effectively pursue these
goals in international trade negotiations.
* This Policy Note has been prepared by Murray Gibbs. All comments and queries can be sent to
esa@un.org
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