RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTDF/M/2
7 August 2002
(02-4352)
Working Group on Trade, Debt and Finance
REPORT OF THE MEETING OF 11 AND 12 JULY 2002
1. The Working Group held its second meeting on 11 and 12 July 2002 under the Chairmanship
of Ambassador Hernando José Gómez (Colombi a).  The Working Group adopted the Agenda
contained in WTO/AIR/1853.
2. Under Agenda Item A, the Working Group adopted the Work Programme for 2002 contained
in WT/WGTDF/W/1/Rev.1 (see Annex).  The Chairman said that, as had been agreed at the last
meeting, the focus of the discussion at the present meeting would be on Item I of the Work
Programme – "The Relationship Between Trade and Finance".
3. The Chairman then referred to Item I.A of the Work Programme – "Financial Architecture
and Trade" – and recalled that at the Group's first meeting, a representative of the IMF staff, in
presenting an overview of the IMF's work on the reform of the financial architecture
(WT/WGTI/W/2), had noted that the major building blocks of its work encompassed transparency and
accountability, the strengthening of financial systems, strengthened external vulnerability analysis and
standards and codes.  The Chairman drew attention to the view expressed by the IMF thatparticipation in the financial sector assessment pr ogramme, together with design and implementation
of prudential standards, could help WTO Members assess their readiness to benefit from opening their
financial services sectors.  The standards initiative, pursued by the IMF and the World Bank, focussed
on the development of internationally-agreed standards and codes to promote strong institutional
underpinnings for a stable international financial system.  The IMF had also stated that the adoption ofstandards and codes of good practice contributed to the effective functioning of markets and created
an enabling environment conducive to investment and trade.  Furthermore, Members had suggested
that the Working Group should examine the issues of exchange rates and their effect on
competitiveness;  of how the present financia l architecture responded to the financial needs of
developing countries;  and of how trade-financing facilities could be strengthened and made moresecure.  These issues had been referred to in documentation circulated for the present meeting,
i.e. including a literature survey by the WTO Secretariat (WT/WGTDF/W/4);  and communications
from UNCTAD, the Asian Development Bank and the OECD (WT/WGTDF/W/5, 6 and 7,
respectively).
4. The Chairman then proposed that the Working Group proceed by inviting each of the
representatives of the three inter-governmental organizations to make their presentations.  After each
presentation, he would open the floor for comments and questions by  delegations.  In making their
comments, the Chairman suggested that delegations id entify key themes that they believed relevant to
items I.A and I.B of the Work Programme.  Following the presentations, he also suggested it might be
helpful to have an exchange of views on themes th at the Working Group might wish to discuss further
in future meetings.
5. He reminded Members that by July next year, the Working Group would need to have agreed
on its report to be presented to the Fifth Ministerial Conference.  A useful first step in that processWT/WGTDF/M/2
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would be to identify themes and issues to be included in the report and he said that this could be done
incrementally as the Working Group moved through the Work Programme.
6. The representative of UNCTAD presented a background paper on "The Effects of Exchange
Rate Instability and Commodity Price Volatility on Trade, Finance and Development", which had
been circulated as WT/WGTDF/W/5.
7. The representative of Venezuela said that his delegation considered that attaching greater
importance to UNCTAD’s views in the WTO could help address imbalances in the system and he
asked whether UNCTAD, in the context of the studies it was carrying out, could address the rights of
developing countries to adopt development policies to solve adjustment problems.
8. The representative of the European Communities reminded the Working Group, as UNCTAD
had done, of what had happened in earlier periods with disastrous consequences for the world
economy.  Over the past decade, the system had adjusted quite well and he noted that, according tothe latest BIS Annual Report, in spite of a number of shocks the present financial system had been
more stable than in the past.  The conclusion he therefore drew was that the overall system was not
that badly in need of reform and that there were hopeful signs.  Most observers saw the financial
architecture in a positive light.
9. The representative of Malaysia pointed to the preponderance of private capital in the
international financial system and to its strong influence on financial markets which prevented
governments from defending themselves against speculative attacks.  The present system was unable
to direct resources to the purposes for which it was needed, i.e. towards development.  Twenty years
ago governments had a bigger say in how the international financial system was managed.
10. The representative of Kenya suggested that UNCTAD's presentation had confirmed that the
mercantilist view of the world was not conduciv e to development.  Some African countries had
liberalized rather quickly as prescribed by international institutions, and perhaps it was not surprising
that those same countries now espoused a more moderate approach.  In his view, WTO principles
should be reoriented towards development, and policy conditionality of international institutions
should be reviewed.  The point made about exchange rate volatility erasing the value of tariffreductions should be further explored, in particular the implication that it might not be advisable for
developing countries to embark on additional liberalization of non-agricultural products as envisaged
in the Doha Declaration.  He considered that the Working Group should study more closely the effect
of greater financial instability and the liberalization of financial flows on trade.
11. The representative of the United States considered that trade liberalization offered the
opportunity for – but no guarantee of – sustained economic growth.  Trade liberalization needed to be
complemented by pro-competitive macroeconomic, institutional and structural reforms ensuringgreater transparency and flexibility.  When such reforms were combined with open borders,
investment was encouraged and became more efficient.  Large inflows of investment under a stable
and sound policy environment were more likely to contribute to sustained development and debt-
servicing capability.  When real or financial disturbances occurred that caused a shift in the balance-
of-payment situation, adjustment would be accompli shed at less cost in the context of sustained
commitment to open markets and pro-competitive market reforms.  The United States viewed the
linkages between trade, debt and finance as more open markets accompanied by pro-competitive
domestic reforms that helped ensure that capital infl ows contributed, to the greatest extent possible, to
economic development, that debt was more easily serviced, and that the necessary balance-of-
payments adjustment was more easily accomplished.  She noted that in the last several years importsfrom low and middle-income countries into the United States had increased substantially relative to
total imports.  She added that UNCTAD’s view of the international financial architecture and its
impact on developing countries, including a call for increased assistance with little or no policyWT/WGTDF/M/2
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conditionality, should recognize that developing countries needed to undergo structural policy
changes which were key to poverty reduction.  The view that the supply of finance to developing
countries had become more expensive and more volatile, affecting trade volumes and terms of trade,
should be balanced with other contributions;  the IMF and other institutions had, for example,
provided concessional loans and grants.  In addition, many developing countries had benefited from aten-fold increase in foreign direct investment a nd trade flows had grown in concert.  The IMF was
committed to growth and poverty alleviation.
12. The representative of Pakistan noted that UNCTAD's presentation highlighted the weaknesses
in the global financial architecture.  There was noth ing in the current trade rules to address the main
components of the balance of payments, trade, debt and finance;  these needed to be dealt with in a
coherent manner.  Coherence could either reinforce the problems created by WTO rules, promoting
liberalization over development, or it could contribute positively to growth and development.  Thepresent initiatives were “ ad hoc ” and did not address the fundamental problems.
13. The representative of China welcomed the initiative of inviting outside speakers to address
the Working Group and he hoped that this practice would continue.  With respect to UNCTAD’s
presentation, particular reference had been made to the very important issue of coherence and to the
description of the relationship between international trade and financial systems.  As the United Stateshad said, it was the responsibility of developing countries to carry out their reform policies, but this
was not the forum to discuss domestic reform.  He considered that a more rational international
trading system could support the domestic efforts of developing countries;  and the WTO did not
provide such a system.
14. The representative of Nigeria noted that UNCTAD had highlighted the destabilizing manner
in which the trading and financial system operated together and the conflicting policy advice from
international institutions.  He supported Kenya’s request for more amplification on the issue of tariff
reductions and exchange rate changes.
15. The representative of India, supporting Pakistan and China, stated that developing countries
had not benefited from domestic reforms and that these countries needed to be supported by a
favorable and development-oriented international system.  India had been attempting to address WTO
provisions from a development point of view, especially those under GATT Article XV III.  India
sought greater clarity on these provisions, and asked how, in UNCTAD's view, they impacted on
developing countries’ production capacities.
16. The representative of Turkey said that it was clear that the Millennium Development Goals
were unlikely to be achieved and he queried what scope existed within the Working Group's mandate
to introduce greater flexibility into WTO provisions.
17. The representative of Brazil considered that there was a wealth of information available to
shed light on the work conferred upon the Working Group by Trade Ministers;  his Government was
very interested in the issues.  In his delegation’s view, the picture was a gloomy one.  The Brazilian
economy was affected by what was taking place in international financial markets.  He supported
China’s view that the Working Group had not been mandated to examine coherence between
domestic policy and regulatory frameworks and international obligations.  However, there were a
number of inconsistencies between the international trading system and the international financial
system which Brazil would revisit.
18. The representative of Colombia asked whether, bearing in mind that price fluctuations led to
domestic and international crises, there was any relationship between commodity price volatility and
the existing rules of the trading system.WT/WGTDF/M/2
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19. In response to questions and comments raised by Members, the observer representative of
UNCTAD said that UNCTAD considered that the underlying principle was not to forsake
development when there was a financial or debt problem; the burden of adjustment should not be onthe trading system.  There was little the trading system could do that could not be done in Washington
and elsewhere.  GATT Article XVIII should not be used too often, rather, financial measures werecalled for.  The world economy had proved to be extremely resilient but there was a difference
between stability and stagnation;  Africa was not growing and in Latin America growth was slow in
spite of major structural adjustment reforms.  He mentioned debtors’ rights and bankruptcy codes
designed to give breathing space to the highly-indebted developing countries, considering that the
international community had no adequate strategy to deal with debt crises.  On the relationship
between tariffs and exchange rates, he said that, u nder floating exchange rates, tariffs did not provide
predictable and reliable protection.  For instance, a six per cent tariff cut could easily be wiped out bya single day's fluctuations in exchange rates.  Studies done in the 1980s suggested that instability of
exchange rates was a major reason for the proliferation of non-tariff measures.  In his view, it would
be worth studying how abuse of anti-dumping and safeguard actions was linked to exchange rate
behaviour.  With respect to conditionality and domestic reform, UNCTAD’s view had always been
that sovereign decision-making was key.  He noted that, in an interdependent world economy, nocountry should be expected to put its house in order without taking into account what was happening
in the rest of the world.  Conditionality had often been unsuccessful and had gone too far, as many
commentators - and the IMF itself - had recognized;  rather than resisting it, the focus should be on
improving conditionality by defining core responsibilities of the international institutions.  In
conclusion, he mentioned that UNCTAD was willing to address any development-related issue andwas at the service of its Members.
20. The representative of the European Communities presented its submission (subsequently
circulated as WT/WGTDF/W/8), which was designed to set the methodological framework and main
approach on how to proceed, by exchanging information and getting a good grip on all the issues
related to trade, debt and finance.  He fully supported the involvement of other institutions, but at thesame time considered that the scope for action elsewhere outside the WTO was a delicate point to
handle.  It might be possible for some indications to be given as to what complementary action would
be expected.  The Secretariat’s literature survey suggested that there were many more issues that the
Working Group could review.  With respect to a debate on domestic policy, it was hard to draw a
dividing line;  e.g. when looking at the link be tween trade liberalization and indebtedness.  It was
necessary to look at domestic developments for the real picture.  Trade as part of economic reform, he
added, was an essential part of other programmes, such as the Poverty Reduction Strategy Paper(PRSP) and the Monterrey Consensus.  He believed  that the Working Group needed to keep an eye on
addressing supply side issues:  foreign direct invest ment (FDI) was the main source of foreign capital
for development, and factors which helped attract FDI had also come out in the debate on financing
for development.
21. The Chairman suggested the Working Group could come back to the EC’s submission at its
next meeting.
22. The Secretariat then introduced its literature survey on the relationship between trade and
finance highlighting the main points covered, including causes of and responses to financial crises
(WT/WGTDF/W/4).
23. The representative of Canada considered that the survey provided a balanced overview of
research on causes of the crises, responses and potential spill-over effects on trade and other areas.
The benefits of financial services flows and challenges to reform had been usefully highlighted, as
had the merit of building a strong international financial system based on prudential rules,
surveillance and transparency.  He said that G-7 Finance Ministers and Central Bank Governors had
this spring put forward a Financial Crisis Action Plan based on improving economic stability andWT/WGTDF/M/2
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creating an environment conducive to trade and investment flows.  The Plan included developing
contingency provisions in sovereign bond contracts and support for IMF work in sovereign debt
restructuring designed to improve the way debtors could react to financial crises.  He found it
noteworthy that the multilateral trading system helped prevent a knee-jerk protectionist response to
the 1990s crises, reflecting an earlier point that the system seemed to be working better than it had
done fifteen years ago.  In Canada’s view, a sound financial sector was crucial to providing security
and certainty to investors as well as to providing trade financing.
24. The representative of the United States noted that the Secretariat paper demonstrated the
positive role that trade policy could play in recovery from crisis, and that crisis-hit countries did not
view trade restrictions as a contribution to their immediate problems;  rather, they continued to phase
in Uruguay Round liberalization commitments and to undertake new ones.  Nor did these countries'
trading partners react inappropriately by restricting imports.  As a result, confidence returned ratherquickly.
25. The representative of the OECD presented a background paper on "Financial Crises:
Implications for Trade and Trade Policy" (WT/WGTDF/W/7/Add.1).
26. The Chairman noted that the representative of the OECD had highlighted the correct policy
responses by crisis-hit countries and had recognized the important role played by official financing in
helping to overcome initial shocks.  In his view, one needed to look at an adequate combination of
external support and internal policy to help reduce excessive contraction in developing countries.
27. The representative of Zimbabwe asked the OECD representative for his view on how
developing countries could best manage fluctuations in G-3 currencies so that their domestic policies
were conducive to development.
28. The representative of the European Communities suggested that, based on the OECD’s
presentation, further analysis on the factors that allowed a positive response might be carried out.
Matters might have turned out quite differently under a scenario of low growth in major markets.
During the Asian crisis there had been a very positive response.  The United States and Europe had
absorbed an enormous amount of imports;  had these markets closed, the crisis would have beenprolonged.  With respect to regulatory reform and financial liberalization, the Working Group might
wish to examine more closely to what extent financial openness versus internal reform had played a
role in recovery.  An additional area for study could be to explore WTO-related areas such as customs
and other regulatory frameworks, which underpinned the smooth functioning of the system.  As an
afterthought, he asked whether the OECD had views on the outlook for the reform process in Russia.
29. The representative of Malaysia noted that internal reform, including financial sector reforms,
had aided in inspiring confidence and assisting recovery.  With respect to Korea’s recovery, she asked
why financial liberalization had been cited as critical and whether other factors had not been relevant
as well.  In looking at other crisis situations, in Mexico for example, the assistance of the international
community had helped to reduce the length of the crisis.  She also asked if the OECD representative
could give his opinion on whether Asia was now in a better position to withstand any future currency
crisis or speculative attack.
30. The representative of Canada expressed interest in the paper on Korea, cited by the OECD,
and its implications for financial sector sequencing and reform.
31. The representative of Korea noted that the OECD had mentioned that Korea’s successful
reform and recovery stemmed from greater foreign equity participation.  He agreed with this
assessment but pointed out another important fact which was the injection of public funds makingWT/WGTDF/M/2
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Korea’s banks healthier than ever before;  non-performing loans had been reduced by 80 per cent and
this would allow the Government to recover its investment.
32. The representative of Uruguay noted that trade policy alone was not a panacea;  it had to be
accompanied by other fundamental reforms.  Recovery after the Asian crisis had been due to
increased exports in response to increased demand in global markets; reforms taken by countries inremoving domestic distortions had been fundamental, but the elimination of trade distortions was also
beneficial.  For export recovery to work, it had been necessary for markets to remain open to allow
comparative advantage to work and development to proceed.
33. The representative of Brazil raised the question of the interplay between trade policy and
financial stability.  In citing the reference in the paper to placing trade policy within a broader reform
agenda, he wondered if other international institutions could play a role.  As the Brazilian Trade
Minister had suggested, in conducting its Article IV reviews the IMF should take into account theextent to which barriers were encountered by developing countries and how this contributed to their
economic performance.  He also sought clarification on to what extent there would be positive effects
on the strengthening of trade financing through further financial services liberalization.  The OECD
had said that export credits could play a role in fostering trade flows, and had cited actions agreed to
by G-7 Export Credit Agencies;  he asked to what extent these efforts had helped to enhance tradefinancing and exports.  He drew attention to th e fact that the OECD Arrangement was embedded in
Article I(k) of the Agreement on Subsidies:  there were certain actions only allowed to participants of
the Arrangement, particularly with regard to export credits, and he asked whether the OECD
representative did not consider that this was detrimental to crisis-stricken developing countries in their
ability to maintain and strengthen their trade financing capabilities and to react through exports.
34. The representative of Indonesia concurred that the crisis emphasized the need for reform of
domestic systems, but he also questioned the soundness and the corporate governance of the
international financial system.  In his Government’s view, many of the foreign banks and financial
institutions had contributed to the financial crisis.  In the early 1990s, financial institutions were
competing at very low interest rates;  after the crisis, the rates rose considerably.  In many cases, theinstitutions had turned a blind eye to the misuse of offshore funds.  He wondered how the OECD
perceived the potential for reform of corporate governance amongst private financial institutions.
35. In responding to these comments and questions, the representative of the OECD said that
exchange rate volatility and exchange rate depreciation had been a major problem.  During the Asian
crisis, banks had been reluctant to offer short-term credits to countries like Indonesia with banking
assets denominated in local currency but debt payments in foreign currency.  His conclusion was that
trade and macroeconomic policy needed to be mutually supportive and needed to include policies toavoid excessive money creation and inflationary pressures.  With regard to Russia, talks in the OECD
had focussed on energy prices and the distortions they created; in the context of WTO accession,
services sector reform was a major issue.  With regard to how Korea’s recovery was directly related to
the opening up of its financial sector, he considered that these actions had inspired investor
confidence and encouraged foreign equity participation in Korean banks.  Its influence could not bequantified easily and this was clearly only part of the answer, but the fact that Korea had been one of
the hardest hit countries but had rebounded the most rapidly was strong proof that financial
liberalization had been a significant catalyst to recovery.  Regarding the possible impact of future
crises in south-east Asia, he believed that these economies were now more resilient because of further
export diversification, sectoral reforms and the development of a greater competition culture in thispart of the world.  With regard to including trade i ssues in surveillance activities, he said that the IMF
and the World Bank were looking at market access issues in cooperation with the OECD.  He
mentioned that there had been recent discussions in the OECD Trade Committee with the IMF
observer on export performance and ability to service debt, and the OECD was engaged in active
cooperation with the Bank and the Fund in this area.  In his view, the benefits of financial servicesWT/WGTDF/M/2
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liberalization to the availability of export credits were effected via the role that liberalization would
have in building confidence in the domestic-banking environment.  During the Asian crisis, the
deterioration had been closely linked to domestic-banking problems;  lending by foreign banks tended
to be more counter-cyclical than that by local banks.  Short-term credits had fallen during the crisis
but not disastrously; as noted in the WTO Secretariat paper, the G-7 recommendations had helped toavoid more serious problems.  He agreed that th ere were problems in how the OECD Arrangement on
Export Credits was working, and that the intern ational community needed to examine its own
corporate governance.
36. The presentation by the representative of the Asian Development Bank was circulated in
WT/WGTDF/W/6.
37. The representative of the European Communities noted that one of the points made regarding
the local environment was the lack of competitio n and the inadequacy of the provision of trade
finance by local banks; he wondered if the representative of the ADB could elaborate on whether
there were instances where market access barriers were an obstacle to the provision of trade credit and
insurance.  He suggested that there might be a ro le in the GATS system to liberalize in order to
remedy any lacunae in the provision of these serv ices.  With respect to country limits which could
shut off export credits from foreign banks, he asked what role there was, noting the ongoing work oninvestment in the WTO, for improvement in multil ateral rules governing transfers, remittances and
expropriation.
38. The representative of Brazil expressed appreciation for the ADB's presentation which had
touched upon the heart of matters that the Working Group should be addressing.  He was interested in
the examination of the role played by domestic versus international banks in contributing to providinga stable environment for flows of trade finance and that a wider presence of foreign banks could be
helpful.  In his view, in some cases the scarcity or high cost of export finance had been more prevalent
where foreign banks were active as compared with economies where domestic banks were able to
provide local currency credit.
39. The representative of Indonesia commented that financial crises tended to reduce
creditworthiness.  Governments and the domestic banking sectors had embarked on long-term
strategies to improve confidence.  He asked the ADB representative what could be done to improve
short-term confidence.
40. The representative of Malaysia asked how th e ADB differentiated between commercial risk
and political risk, especially where the former was a result of political instability.  She was also
curious as to how sudden dramatic changes were taken into account and whether the ADB maintained
sufficient funds in case of another regional crisis.
41. The representative of Turkey asked about the level of co-financing in ADB funding and
whether the ADB was in a position to provide short-term liquidity at times of crisis.
42. In response, the representative of the Asian Development Bank said that the ADB maintained
an emergency loan capacity but that more genera l balance-of-payments financing was something that
its sister organizations were set up to do.  Roughly half of the ADB’s loans to developing countrieswere co-financing loans:  commercial co-financing was carried out with banks and insurance
companies that took risk for profit and the ADB also provided official co-financing.  The number of
commercial banks involved in project financing in Asia had decreased along with a trend of
consolidation amongst international banks, but political risk insurers who wanted to invest were
coming on-board as co-financing partners.  He explained that the ADB did not assume any foreignexchange risk;  repayment was expected in the loan  currency.  With respect to Indonesia’s concerns,
he said that reliable and adequate information would keep bankers acting rationally;  creditors wouldWT/WGTDF/M/2
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overreact if they had incomplete information.  He added that in his experience partnerships between
foreign correspondent banks and local banks had been fruitful.
43. The Working Group then turned to Item I.C of the Work Programme and the WTO
Secretariat introduced its paper on "Relevant WTO Provisions2 (WT/WGTDF/W/3).  Many
provisions related to trade and exchange rate stability and restrictions.  Changes in tariffs affectedchanges in relative prices within an economy;  exchange rate changes affected overall prices,
therefore it was too simplistic to make direct links.  It was important that exchange rate restrictions
did not frustrate trade policy through the WTO.  There were also provisions relating to external
financial difficulties, mainly the balance-of-payments provisions;  and there was work going on under
implementation in the Committee on Balance-of-Payments Restrictions.  Some provisions related to
financial assistance to development within the context of trade policy had been identified.  The
representative of the Secretariat also referred to th e Coherence Decision cited in the paper adding that
issues regarding fiscal revenue and trade taxes had been discussed under the Coherence mandate in
the Informal General Council.
44. The representative of Indonesia wondered whether the Working Group could address the
issue of indebtedness under the balance-of-payments provisions since many measures taken for
balance-of-payments purposes were related to the inability of making debt-service payments.  Ashighlighted in the Secretariat paper, there were many possibilities for flexibility by developing
countries.  In the 1990s the debt problem of many  developing countries had worsened.  The Working
Group’s mandate included possible solutions to the pr oblem of external indebtedness and the linkages
between trade and debt should be examined.
45. The representative of Brazil raised a question regarding Article XI of the GATS and
footnote 8 of GATT Article XVI.  The former referred to payments and transfers for current
transactions related to commitments;  and footnote 8 of Article XVI said that if the cross-border
movement of capital was an essential part of cross-border supply, the Member was committed to
allow related transfers of capital.  He was curious to know what extent these obligations would be
related to a Member's right to control its capital account transactions and what relationship theseprovisions had to the IMF's Articles of Agreement.
46. The representative of the United States noted that, from a trade perspective, the existence of a
stable and effective international financial and payments system, and effective operation of
international balance-of-payments adjustment mechanisms had long been viewed as critical to the
expansion of international trade and the benefits derived therefrom.  A number of the identified
provisions relating to the financial area were being considered in other bodies of the WTO, e.g. in the
BOPs Committee and in negotiations on financial services.  She added that she, too, would beinterested in clarification on Brazil's points.
47. In the response to Indonesia's question, the Secretariat said that there was no doubt that the
balance-of-payments provisions could be linked to debt problems.  At the request of a Member, the
Secretariat was currently preparing a paper on assessments of reserve adequacy by the IMF for
discussion in the BOPs Committee.  This paper might also be useful to the Working Group.Indebtedness was a factor that had been, and that should be, taken into account in assessing the
country’s balance-of-payments situation.  The core question was whether trade restrictions were
helpful;  the conclusions arrived at by the BOPs Committee were that trade restrictions could be used
as a temporary measure but were no substitute for alternative, more fundamental, measures to try to
correct problems of disequilibrium, whether these lay in external indebtedness or domestic demand.The Secretariat also noted that a reply to Brazil’s question could be provided during the next meeting
of the Working Group.WT/WGTDF/M/2
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48. In summing up the discussions on the relationship between trade and finance, the Chairman,
on his own responsibility, identified the following themes that had emerged:
• The value of the WTO system in providing stability and economic security in periods
of financial crisis;
• the value of keeping markets open world-wide in periods of financial crisis, so as to
ensure that crisis-hit economies are able to continue to count on exports for foreign
exchange earnings and a source of income growth;
• the role of trade liberalization in resource allocation and the resilience of economies
to external shocks;
• the relationship between the exercise being carried out by the IMF and World Bank to
strengthen financial systems, and the negotiations being carried out by the WTO on
financial services;  and
• based on experience gained in Asia, the need to improve the stability and security of
sources of trade-financing, especially to help deal with periods of financial crisis.
49. Members understood that this was a summary of the discussion – not a checklist – and that it
could help focus the Working Group's work in light of the drafting of its report to the Fifth Ministerial
Conference.
50. Under "other business" the representative of Nigeria asked whether the African Development
Bank could be invited to share its perspective on some of these issues in subsequent meetings.
51. The Chairman said that it was his intention to invite the AFDB to do so.  He continued that, as
agreed, at its next meeting on 30 September the Working Group would take up the issue of the
relationship between trade and debt.  The Secretariat would prepare a brief literature survey on the
linkages between trade and debt, similar to the one th at had been prepared on trade and finance.  Also,
the paper on provisions could be revised, if necessary, and he suggested that the Working Group
invite the World Bank to present an overview of its initiatives on debt reduction.  The U.N. Economic
Commission for Latin America and the Caribbean and the African Development Bank could also beinvited to discuss regional experiences with debt.  The Chairman also said that he would be holding
informal consultations with delegations with a view to the work programme for 2003 and to the
possible inputs to the report to the Fifth Ministerial Conference.  He thanked the European
Communities for its submission and encouraged other Members, especially the demandeurs, to
likewise make written submissions to assist the Working Group.
52. The meeting was adjourned.WT/WGTDF/M/2
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ANNEX
WORK PROGRAMME 2002
I. THE RELATIONSHIP BETWEEN TRADE AND FINANCE
A. FINANCIAL ARCHITECTURE AND TRADE
B. TRADE POLICY AND FINANCIAL STABILITY
C. ANY RELEVANT WTO P ROVISIONS
D. OTHER TOPICS RAISED BY MEMBERS
II. THE RELATIONSHIP BETWEEN TRADE AND DEBT
A. EXTERNAL DEBT AND TRADE
B. TRADE -RELATED ISSUES AND ALLEVIATION OF THE EXTERNAL INDEBTEDNESS OF
DEVELOPING AND LEAST -DEVELOPED COUNTRIES
C. ANY RELEVANT WTO P ROVISIONS
D. OTHER TOPICS RAISED BY MEMBERS
III. TOWARDS GREATER COHERENCE
A. ASSESSMENT OF WORK IN PROGRESS
B. ORIENTATION OF FUTURE WORK
__________