WORLD TRADE
ORGANIZATIONWT/GC/W/297
5 August 1999
(99-3322)
General Council Original:  English
PREPARATIONS FOR THE 1999 MINISTERIAL CONFERENCE
EC Approach to Capacity Building and Coherence in
Global Economic Policy-Making
Communication from the European Communities
The following communication, dated 28 July 1999, has been received from the Permanent
Delegation of the European Commission.
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1. Greater policy coherence is essential to promote an open and stable economic policy
framework and to integrate developing countries in the world economy.  It requires closer cooperationbetween international organizations in trade-related areas to enhance complementarity and mutual
supportiveness of policies in support of trade liberalization.
2. In the Uruguay Round Declaration on the Contribution of the WTO to Achieving Greater
Coherence in Global Economic Policy-Making, Ministers recognized that coherence between the
structural, macroeconomic, trade, financial and development aspects of economic policy-making
increases the effectiveness of these policies.  The Declaration is based on the mutual supportiveness
between trade liberalization, greater exchange rate stability, macroeconomic policy reform and anadequate and timely flow of resources to developing countries, as well as efforts to address debt
problems.
3. It was for these reasons that Ministers called for the WTO to pursue and develop cooperation
with the IMF and the World Bank with a view to achieving greater coherence in global economic
policy-making.  In 1996/97, the WTO concluded Cooperation Agreements with both organizations,providing for regular consultations between the inst itutions and for a more systematic exchange of
information.
4. In the preparations for a new round of comprehensive trade negotiations, the Uruguay Round
Declaration and the existing cooperation agreements with the Bretton Woods Institutions should be
further implemented through concrete initiatives to achieve coherence so as to help ensure an openand stable economic policy framework conducive for developing countries’ integration into world
trade, their economic and social development and poverty reduction.  At the same time, there is a need
to consider the interaction between different policies aiming at sustainable development, while
maintaining the distinct competencies of different international institutions.
5. It is with this objective that the EC proposes:  (i) that a WTO work programme on coherence
in global economic policy-making be developed and introduced by the Seattle Ministerial Declaration.
We suggest that this work programme be built along  the three axes, described in the following, with
the possibility of adding new elements when appropriate; (ii) that the relevant internationalWT/GC/W/297
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organizations, by the Seattle Ministerial, confirm their commitment to enhanced coherence in global
economic policy-making with the aim of helping developing countries integrate into the world
economy.
A coordinated approach to trade-related capacity building
6. The concept of trade-related capacity building goes beyond the traditional WTO Secretariat
technical assistance activities.  A distinction can be made between three types of trade-related
capacity building:  (1) trade-related technical assistance for a better understanding and use of
WTO rules, so that the developing country itself is able to exploit to a maximum the opportunities
offered by the multilateral trading system, e.g. in the dispute settlement area.  This kind of trade-
related technical assistance is the proper function of the WTO Secretariat training programmes;
(2) trade-related technical assistance to enhance the capacity of developing countries to adopt and
implement domestic laws and regulations in order to fulfil their WTO obligations, e.g. in the field ofTRIPS.  Other international organizations and agencies whose capacities in new policy areas
complement the WTO Secretariat’s knowledge and skills are often involved in these programmes,
e.g. UNCTAD, WB, WIPO and WCO;  (3) trade-related technical assistance aimed at enhancing the
ability to trade of a given sector, country or region (when a regional integration dynamic is in
progress) through supply-side reforms.  This category includes a large variety of measures andsectors, e.g. technical training, industrial development, sectoral capacity building and support
programmes, and may or may not be primarily trade related.
7. A broader approach to capacity building can only be effectively implemented on the basis of
coordination between donors and full participation of developing countries.  This has been recognized
at the High-Level Meeting on Integrated Initiatives for Least-Developed Countries’ TradeDevelopment by the creation of the Integrated Framework for Trade-Related Technical Assistance to
LDCs (the Integrated Framework), which provid es for coordination between donors and a demand
driven, participatory approach.  The EC considers that these fundamental principles could be extended
to other developing countries, in using the experi ence and knowledge gained through operation of the
Integrated Framework.  Extending the principles of the Integrated Framework could focus on twoobjectives: (a) assisting developing countries in implementing existing WTO commitments; and
(b) identifying capacity-building re quirements in relation to commitments in a new round of trade
negotiations.  Support for trade-related capacity building should also be made available, where
appropriate, to developing countries in the process of accession to the WTO.
8. A new approach to capacity building should ensure that when an agreement is being
concluded in the WTO it is accompanied by a  framework to be put in place to support the
implementation in light of country specific requirements.  This would require (i) for each agreementthe definition of steps to take for implementation, e.g. introduction of legislation, creation of an
administrative body, computerisation, provision of administrative services etc.;  (ii) each developing-
country Member’s identification of its specific requirements in relation thereto, in cooperation with
relevant international donors.  As the actual technical assistance needs are country specific, depending
on the level of development and existing regulation and trade regime of the country, technicalassistance requirements would not be laid down in th e agreement itself, but identified in relation to the
agreement.  This would also facilitate the monitoring of the implementation of capacity building
programmes.  Monitoring could be carried out by regular reporting to the relevant committee in the
WTO.
9. The EC would welcome a clear commitment by international organizations, in particular
Integrated Framework participants, to enhanced and better coordinated trade-related capacity
building.  For the EC and its member States, trade-related capacity building is a strong element of
development cooperation policies.  We ar e ready to provide our full support.WT/GC/W/297
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Enhanced cooperation and transparency  in support of trade liberalization
10. Autonomous trade liberalization measures, whether in the context of IMF and World Bank
programmes or on the own initiative of a Member, contribute to the goals of the multilateral trading
system and are in the interest of all Members. Acknowledgement in the WTO of autonomous
liberalization measures would provide an incentive to implement and sustain such measures andwould help avoid postponement of necessary trade policy reforms.
11. WTO Members should recognize the contribution made by autonomous MFN trade
liberalization, provided that the lasting character of  the trade liberalization is guaranteed.  Binding of
prior autonomous MFN trade liberalization should be recognized as a contribution in a new round of
trade negotiations.  With the objective of tr ansparency and to allow them to benefit from
acknowledgement in the WTO, Members are also encouraged to notify autonomous trade policy
reforms.
12. The International Monetary Fund and the World Bank can also play an important role in
support of trade liberalization measures agreed in a new round of trade negotiations.  The IMF has in
the past contributed to analysis regarding revenue  loss in relation to trade liberalization and can
contribute by support for necessary fiscal reform to avoid potential loss of revenue arising from tariff
reductions.  The important contribution of capacity building measures is discussed in the above.  TheWorld Bank can, inter alia , continue to contribute by analysis and assistance, together with other
participant organizations to the Integrated Framework.
13. Members’ liberalization commitments in the multilateral framework can be an important
component of countries’ lasting economic policy reforms with an impact on macroeconomic and
development policies.  The EC would welcome ack nowledgement by the International Monetary Fund
and the World Bank, autonomously and within their respective competencies, of countries’
liberalization in the multilateral framework when setting up programmes.
14. The WTO Trade Policy Review Mechanism can add value to other international review
exercises by an across-the-board assessment of trade policies and the interaction of economic and
development policies with trade policy.  Considerat ion should be given to promoting greater synergy
between the TPRM and the review processes of other institutions.  For example, TPRM reports could
include reference to recent IMF Article IV consultations or to trade policy reforms introduced in the
context of IMF or WB programmes.  Closer cooperation between the Secretariats on this matter
would help promote synergy.  Consideration should also be given to promoting a more active role for
the IMF and the WB in TPRM reviews and a more active role of the WTO Secretariat as regards trade
aspects of Article IV consultations.
Promoting complementarity of action by international organizations in support of policy
coherence
15. In the globalized world economy there is incr easing interaction between different policy
areas.  Each international institution has its own areas of competence and instruments to use in
fulfilling its tasks.  The WTO competence lies in the field of trade and trade related policies, although
it may need to consider the relation between the WTO framework of rules and other policies with animpact on trade.  This should not be blurred:  each institution must continue to act autonomously in
accordance with its mandate and in avoiding any element of cross-conditionality.  However, it is
necessary to promote complementarity of the policies of relevant institutions in support of the overall
goal of integrating all countries into the world economy.WT/GC/W/297
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16. Efforts towards common and complementary objectives could be given greater attention.
Joint policy analysis of issues with implications for the work of different international organizations
could be a building block towards coherent policy implementation.  Each institution would contribute
with elements within its field of competence.  The results of the joint analysis could be discussed in
each international organization, which would focus on the areas of its particular responsibility.  Thisjoint analysis would complement the existing informal policy discussions and help create a common
understanding against which to act and focus the action of the institutions.  It could increase
transparency of the policy decisions of the institutions and facilitate their interaction.  Depending on
the subject to be considered, different institutions  could be involved to the joint policy analysis.
17. Joint policy analysis should be given greater prominence in the implementation of the
agreements between the WTO and the Bretton Wood s Institutions.  Consideration should also be
given to any interface with policy areas of other international organizations, e.g. UNCTAD, UNDP,WCO, ILO, UNEP, WIPO, FAO, WHO, by consider ing how the promotion of complementarity and
mutual supportiveness of policies can contribute to the objectives of sustainable development,
integration of developing countries into the world economy and the expansion of trade in an equitable
manner allowing for its benefits to be broadly shared.  The Community will shortly present a paper on
how to address this broader dimension of compleme ntarity in the work of different international
organizations.
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