Questions in the News

Responses to Questions About IMF Policies and Country Operations

Trade and aid

Last Updated: April 14, 2007
Question:  Could you elaborate further on your discussions with Mr. Lamy of the WTO? Did he give you any good reason to believe and expect that the barriers to a successful outcome of the Doha Round are surmountable?
Answer:  MR. BROWN: When we met last in September in Singapore, the trade talks had broken down. There seemed very little chance of resuming them at all. When we went to Davos in January, the trade talks were still stalled and there had been no formal agreement to resume them. In these last few weeks, there has been, first of all, a formal agreement to resume the trade talks, and second, there has been a meeting in Delhi of the Group of Four, that is, the four major negotiators. Third, Pascal Lamy has come to the International Monetary and Financial Committee to tell us that, in his view, it was possible to move quickly to a deal, and he reported not only on the discussions that he has been having with other countries, but on the determination of world leaders, not Finance Ministers and Trade Ministers but the world's Heads of State, to move this forward. He also asked us to make sure that there was an aid for trade package available. That is not something that is formally part of the Doha Round. The aid for trade package would be available so that the developing countries could position themselves to benefit from the trade agreement by having funds for infrastructure almost immediately. The G7 agreed that $4 billion would be available by 2010. This is an important part of the process. And we have also agreed on an enhanced initiative to provide technical advice and assistance to countries as they prepare to gain the benefits of a trade round through developing their economies.

I know I have been an optimist about trade talks and an optimist about the resumption of negotiations. Despite what was said last September that negotiations would not resume, they have resumed. They are moving forward. What Pascal Lamy was asking us to do was to demonstrate leadership and a willingness to compromise to get an agreement as a matter of urgency over the next few weeks and months.
April 14, 2007
Transcript of a Press Briefing by UK Chancellor of the Exchequer Gordon Brown, Chairman of the International Monetary and Financial Committee, and IMF Managing Director Rodrigo de Rato, with John Lipsky, First Deputy Managing Director of the IMF, and Masood Ahmed, Director of IMF External Relations Department
Question:  Can you tell us practically how we can move forward and bring the Doha Round to a conclusion when the United States and Europe have shown time and time again that they are not prepared to move from their positions that led to the initial collapse of these talks?
Answer:  MR.DE RATO: The Doha Round has already produced important questions that are on the table and that are very positive, especially for low income countries to integrate themselves into the global economy. What is needed now is the extra mile that is necessary for an agreement, and I think we are all aware that on that extra mile there are special responsibilities—special responsibilities of leadership for certainly the U.S., Europe, and Japan, but also for the large emerging economies. We need an agreement, a final agreement on farm subsidies and agricultural liberalization, but we also need an agreement on industrial liberalization. So it is important for the negotiators, very specifically those from the key countries which are certainly industrial countries, but also some of the large emerging economies, to make the final efforts to give the world a very important push in the right direction to consolidate this historical momentum of growth that is changing the lives of so many people in so many countries.
April 12, 2007
Transcript of a Press Conference by IMF Managing Director Rodrigo de Rato with John Lipsky, First Deputy Managing Director, and Masood Ahmed, Director of the External Relations Department, IMF
Question:  Regarding Russia's accession to the WTO, the Russians seem to be getting closer again to completing their bilateral discussions. From the point of view of the IMF, what would you say to those in Russia who claim that the country is better off without the WTO? And a second question, does it make sense for Russia's trading partners to hold out against its joining?
Answer:  On the first question, that is a decision Russia going is to have to make. But from our point of view, we think that accession of Russia to the WTO would be a very good thing for the following reasons: First of all, accession would bring about some liberalization of trade. This should be a boon for Russian consumers, and it will also help to build more competitive industries. Secondly, WTO membership provides a framework of rules, and that gives greater certainty to both exporters and importers. Also, looking at the experience of other countries that have joined the WTO, membership often translates into an ability to leverage necessary domestic reforms in a variety of areas, including, for example, in the areas of services and competition policy. I would also say that one key advantage of the WTO process is that it provides a benchmark for legal, regulatory, and transparency reform, plus a monitoring device and an implementation mechanism through the dispute-settlement process. For all of these reasons, there are strong advantages for countries, including Russia, to join the WTO. On the second question, I think accession to the WTO is a process whereby countries that join it have to make a set of commitments that they are going to be following the rules, and existing partners then agree with them to terms in which new members join the WTO. We have taken a view, historically, that for the world multilateral trading system, it is good to have membership of more and more economies, but the ultimate decisions and the terms under which individual countries become members is made by the process within the WTO—not within the IMF. Obviously, we are not going to be able to comment on the specifics of that matter.
November 3, 2006
Press Briefing by Masood Ahmed, Director, External Relations Department
Question:  There have been many calls to move forward in these trade talks, the latest of them in St. Petersburg only a couple of months ago. What makes you so confident that it is different this time and that there will actually be a deal before the fast track authority runs out in the U.S. in the spring of next year?
Answer:  I am more optimistic, as I said, as a result of the discussions we had over this weekend, first of all because we have put in place a most ambitious package of aid for trade. I think the second thing that gives me hope that we are moving forward is the determination on behalf of the members, on the part of the members today. I have never seen a discussion in all the years I have been at the IMF meetings that was so determined that we bring the trade talks to a conclusion, so aware of the risks that have come from rising protectionist pressures, and so determined that they actually say in the communiqué that not only do they want an early resumption of the negotiations, but an ambitious, successful outcome by the end of the year and a commitment to a comprehensive package on agriculture, industrial products, and services, to which all countries will need to contribute.
September 17, 2006
Press Briefing by Gordon Brown, Chairman of the International Monetary and Financial Committee
Question:  How serious is the breakdown in the Doha Round talks and what does the Fund think should be done now in order to put the talks back on track?
Answer:  I think there could not be a more serious event, even though the markets took the breakdown in stride—in fact stock markets by and large went up the next day after the collapse was announced—but it appears that for the medium-term health of the world economy we need continuous improvement on the trade front and, therefore, the breakdown of the Doha Round is clearly a problem. What is needed going forward is compromise on all sides. For one, we do not think that countries that have put a proposal on the table should withdraw it; in fact, they should seek to improve on their proposal, and to recognize that, in order to favor a relatively small number of countries, they are hurting the majority. I think we should see the consequences, and, as I said, the consequences are not merely for trade, they are also for domestic reforms, because the impetus for domestic reforms will be far more muted if in fact we have a setback to global trade.
September 14, 2006
Press Conference on the World Economic Outlook Report, Raghuram Rajan, Economic Counselor and Director of the Research Department, IMF
Question:  What is the IMF's thinking on last weekend's WTO talks in Geneva?
Answer:  The IMF's thinking on trade and on the importance of the effective and successful completion of the current multilateral trade negotiations has been articulated often, frequently, and forcefully: We strongly believe that it is important for the world and for developing countries, and really all parts of the membership, to have a successful conclusion to the trade round. Like others, we are watching the process unfold. We recognize that the process has been a little bit difficult in the last weeks, and we very much hope that there will be an effort to try to bring this to a successful conclusion. We see trade and the successful conclusion of the round but—but more importantly, a fair and effective and rule-based multilateral trading system—as being a critical component of both a globalization model network, and also a critical component that enables countries to take advantage of the opportunities that a global economy can provide.
July 6, 2006
Press Briefing by Masood Ahmed, Director of External Relations, IMF
Question:  Could you comment on the rising tide of protectionism, which is a theme that came up very strongly in the Spring 2006 World Economic Outlook?
Answer:  I would like to emphasize the importance of a satisfactory conclusion of the Doha Round. I want to emphasize that this is a very important opportunity for the world economy, that multilateral trade liberalization is key for the quality of growth and the opportunity of countries, and that there is a shared responsibility of emerging economies and developed economies to really come forward in a multilateral agreement on the Doha framework. It would not only be a pity, but it would be a very important missed opportunity to move forward in this respect, and I take this opportunity to call on developed countries—certainly Europe, the United States, Japan, and others—but also emerging economies to learn from their own experiences. All of them have benefited tremendously from free trade. All countries, especially the most important countries in the world, both on the emerging and developed side, if you want to maintain that distinction, have had very important successes, internal domestic successes because of free trade. They will lose a lot of jobs and a lot of opportunities by missing this target, and that also will not have very good consequences for the less developed countries in the world. On top of that, we are witnessing—and that is clearly stated in the World Economic Outlook—that protectionism has been showing its face in some countries, and I have to say in some leading countries, developed countries. That is a big mistake. The rates of growth, the rates of employment, certainly the rates of inflation, the opportunity for consumers in those countries—the United States and Europe—are related to free trade. The first that will pay a heavy price for protectionism will be those consumers and those citizens and those countries. Once again, I have to really say that not only do we see protectionism as a risk, but that we will certainly take a very strong stance on every occasion we have to avoid and to denounce protectionist measures in countries.
April 20, 2006
Press Briefing by Rodrigo de Ratio, IMF Managing Director
Question:  What is your assessment of the current situation of the negotiations in the Doha Round, and what would be the consequences for the global economy of a failure that seems each day more likely?
Answer:  I have followed with apprehension the newspaper reports that suggest that things are not proceeding toward a conclusion before the April deadline. Deadlines have been missed before. I am hopeful that good sense prevails. I think that a failure of the Doha Round, though not catastrophic, would be a very important setback and, coupled with all the noises about protectionism that are emerging, would just contribute to the strong anti-globalization mood. We have to remember that much of the good fortune we have right now is because of the forces of globalization. Because of an integrated world product market, we have managed to keep inflation down. Because of an integrated savings pool, interest rates are so low. So, to have protectionism come back at this point would be to lose many of the benefits we have gained. I think a slowdown in the process of trade opening, which a failure of Doha Round would mean, would contribute to these forces. So, it would be a very important setback if the Doha Round fails. But I am hopeful. We have seen deadlines missed before, and I am hopeful that this deadline is met. But even if it is not met, I am hopeful that good sense prevails over time and last-minute bargaining gets us where we want to be, an ambitious Doha Round.
April 19, 2006
Press Briefing by Raghuram Rajan, Economic Counselor and Director of Research
Question:  What do you think will happen if countries fail to reach a compromise in Hong Kong at the WTO [Ministerial Conference in December 2005]?
Answer:  Right now, countries have the opportunity to take a decision and all the countries involved are responsible for making that decision. But probably a group of countries around the G-20 is key to understanding that trade liberalization is a two-way street and good for all. At the same time, one of the dangers is an increase in protectionist pressures. Even though it is not that easy anymore to protect yourself from outside producers that have become part of your domestic system, we see some strong signs of protectionist measures. This will certainly make the orderly evolution of global imbalances even more complicated. I believe that Hong Kong not only will have merit in itself by increasing a more open, multilateral agreement on trade, but at the same time will reduce the chances of protectionist pressures.
September 22, 2005
Press Conference by Rodrigo de Rato, IMF Managing Director
Question:  What needs to be done to increase the trade quotas of low-income countries?
Answer:  Both the Managing Director of the IMF and the President of the World Bank and others have been clear that to help low-income countries grow, developed countries have to open up their markets to low-income country imports. That means removing trade barriers. It means removing subsidies. It means allowing these countries to compete effectively in developed countries with developed country producers. The WTO Doha round is ongoing, and the IMF is involved in helping that round come to a successful conclusion, which we think will indeed promote trade between the lesser developed world and the developed world.
June 30, 2005
Press Briefing by Mark Plant, Senior Advisor, Policy Development and Review Department:
Trade and aid : archived questions and answers