Reforming domestic trade policy

Advancing structural adjustment of trade through national policies
Developing domestic programmes to maximise benefits of trade liberalization
Restructuring trade patterns of countries

Context

Market access would be improved if all countries implemented previous commitments to halt and reverse protectionism, particularly in areas of interest to developing countries. This would be facilitated by appropriate structural adjustment in developed countries and by developing countries continuing the trade-policy reforms and structural adjustment they have undertaken.

The IMF-WB structural adjustment programs have become the most powerful instrument in economic intervention in most countries which had fallen into debt crises. These programs are utilized to institute various measures of liberalization, including deregulation and privatization.

Implementation

This strategy features in the framework of Agenda 21 as formulated at UNCED (Rio de Janeiro, 1992), now coordinated by the United Nations Commission on Sustainable Development and implemented through national and local authorities.

Claim

Governments, whether they have privatized much of their country's infrastructure or the latter is still run by the public sector, have three roles in ensuring an open and efficient trading process: (a) running, planning and developing a national economy; (b) operating official controls on a day-to-day basis; and (c) running a large business, which buys and sells goods and services. The relative importance of each of these three components will vary from country to country, just as the amount of simplification already achieved will vary considerably. So it is not possible to propose a set of standard actions. It is, however, possible to give broad guidelines that can be refined and targeted once set against the actual situation in any country. The objective for any government in any of these roles is quite clear – be effective, be efficient and be economic. There is a growing realization that governments have customers, just as businesses do. Customer satisfaction is a high priority. In managing the national economy and operating controls effectiveness, efficiency and economy have to be considered in the overall framework, not just the individual cost elements to government, when developing national trade.

Counter-claim

Trade policy reform is complicated. It is closely linked to liberalization in capital, labour, and domestic product markets and to macroeconomic policy. It is partly a political process, in which credibility and expectations play an important role. Feasible policy choices may differ from country to country, and reform may be vulnerable to changes in the international environment. Because of this complexity, there is no single optimal path to reform.