TRADE, DEBT AND FINANCE WTO’s contribution to solving debt and financial crises

The Working Group on Trade, Debt and Finance was set up at the Fourth Ministerial Conference in Doha in November 2001. Bearing in mind the financial crisis in Asia and the heavy debt burden borne by many developing countries, members decided to explore how trade could help.

The underlying belief is that markets should be kept open worldwide in periods of financial crisis. This would ensure that crisis-hit economies can continue to count on exports in order to earn foreign exchange, and to help their incomes to grow. The 1998 financial crisis showed how important keeping markets open can be. Many countries in the region were able to bounce back to economic growth led by exports. If access to foreign markets is restricted, indebted countries may not be able to earn enough foreign exchange and to service their external debt. They may have to resort to further unsustainable borrowing.

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Since then … 

Since Cancún, the working group has been examining the relationship between trade and finance, between trade and debt, and the relevant WTO provisions. More precisely, it has made good progress by focusing on a list of eight themes:

  • trade liberalization as a source of growth
  • WTO rules and financial stability
  • the importance of market access and the reduction of other trade barriers in the Doha Development Agenda negotiations
  • trade and financial markets
  • trade financing
  • better coherence in the design and implementation of trade-related reforms and monitoring
  • the linkages between external liberalization and internal reforms
  • external financing, commodity markets and export diversification

Some members made the remarks that many of these issues did not belong in the purview of the WTO. Some members also said that a part of the subjects should be discussed in other WTO fora, such as the liberalization in financial services, the enhancement of market access and the problems of commodity exporters. Others suggested that the working group put forward recommendations. The ACP countries considered, for instance, that the WTO should recommend immediate debt cancellation by relevant organizations or governments. They also suggested the creation of a regular committee on Trade, Debt and Finance.