November 20, 2003
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In a letter to Heads of Government of all member countries, International Monetary Fund (IMF) Managing Director Horst Köhler and World Bank President James D. Wolfensohn called for renewing progress on world trade talks. Köhler and Wolfensohn emphasized the centrality of multilateral trade liberalization to growth and prosperity over the past fifty years and stressed that expanding trade by collectively reducing barriers is the single most powerful tool that countries, working together, can deploy to reduce poverty and raise living standards. They underlined that trade liberalization is not a "concession", but a step to promote opportunity and productivity that benefits the society that takes it.
In the letter, the Bank and Fund reaffirmed their commitment to help member countries to take full advantage of the opportunities of more open trade and to also help them manage the risks.
The full text of the letter follows.
November 11, 2003 Madam / Sir, As you know, the Ministerial Meeting of the World Trade Organization (WTO) in Cancún ended in failure. While this was a serious disappointment, it has also made clear the magnitude of the issues at stake. Against this background, the world's finance and development ministers, meeting in Dubai in September, asked us to raise with you and other heads of government the urgent need to move forward with the Doha Development Agenda. Successive rounds of multilateral trade liberalization have been central to the unprecedented rise in global prosperity over the past half century. The Doha Agenda presents an opportunity to deepen this process, to maintain and accelerate growth, and to spread its benefits more widely. Multilateral liberalization offers by far the greatest scope for realizing these goals—bilateral and regional arrangements are no substitutes. Moreover, expanding trade by collectively reducing barriers is the single most powerful tool that countries, working together, can deploy to reduce poverty and raise living standards. Liberalizing trade is a core element of the strategy agreed in Monterrey to help developing countries achieve the Millennium Development Goals. The current pattern of protection undermines these goals. It generally works against the poorest countries—and the poorest consumers in all societies—because trade barriers in both developed and developing countries tend to be highest in agriculture and labor-intensive manufactures. We cannot allow the impasse at Cancún to dash the hopes vested in the Doha Agenda. On the contrary, this setback challenges statesmen to rise above entrenched negotiating positions and create the necessary conditions for a successful conclusion of the round. We believe that the talks must be based on the common understanding that liberalization over time will benefit all countries. Trade liberalization is not a "concession," but a step towards helping to promote opportunity and productivity that benefits the society that takes it. Over the past few weeks there have been encouraging signs that countries are willing to return to the negotiating table. They should do so with a sense of urgency, and a political commitment to undertake sometimes difficult measures. We are convinced that progress can be made if the negotiations are based on the following elements: • Early, concrete, and ambitious commitments on agriculture, including reductions in border protection, a time-bound phase-out of the various forms of export subsidies, and curbing trade-distorting domestic support; • A willingness of all countries—developed and developing—to be fully engaged and to take on substantive obligations concerning market access in manufactures, agriculture, and services; and • Flexibility with regard to new regulatory obligations, particularly the so-called Singapore issues; the first step towards flexibility is to consider each issue separately to allow countries to build better practices consistent with their development, trade, and financial needs and objectives. We respectfully encourage you to bring together the main parties in your administration in order to evaluate these proposals from the broadest national and international perspective. Our institutions are ready to help. As we have informed the Director-General of the WTO in August, we will support our members so that they will be able to take full advantage of the opportunities of more open trade as well as helping them manage the risks associated with open trade. We can do so by: • Helping countries design policies, institutional reforms, and investment programs aimed at addressing key obstacles to trade expansion and at increasing competitiveness; • Helping governments assess adjustment needs and help design and implement measures to support affected population groups; and • Tailoring our lending to respond to the specific challenges posed by the Doha Development Agenda. The IMF is preparing an initiative to support members experiencing temporary balance of payments shortfalls as a result of multilateral liberalization. The World Bank will make lending available at the project, sector, and country levels in support of programs to improve trade logistics and increase competitiveness. In the context of coherent country financing plans, we also aim to provide support in mobilizing donor and other resources, including concessional finance from IDA. In closing, we believe that the WTO meeting scheduled for December 15 and the ensuing months are critical to the future of the multilateral trade negotiations. Your efforts, and those of the other leaders of the international community, are essential if the promise of the Doha Development Agenda is to be realized. Sincerely yours,
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