Trade Mainstreaming and DevelopmentEIF Spokes Meeting 12-13 February, 2014

Lusaka

Simon Ng’ona Centre Coordinators CUTS International

• Definition - Trade Mainstreaming • Trade and Its Importance • Link Trade Development and Poverty Reduction

– Trade Policy Formulation Process – EIF/Trade Policy Formulation and Implementation– Development Planning Process – Opportunities for Trade Mainstreaming

• Conclusion

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Outline

• No single definition has been agreed upon on trade mainstreaming. – UNECA “Mainstreaming trade policies in national development

strategies involves the systematic promotion of mutually reinforcing policy actions across government departments and agencies with a view to creating synergies in support of agreed development plans.

– UNDP “mainstreaming trade is the process of integrating trade into national and sectoral development planning, policymaking, implementation and review in a coherent and strategic manner.

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Definition of Trade Mainstreaming

• Trade is a useful tool for spurring economic growth and poverty reduction

• Historically, no country has achieved sustained prosperity and economic growth while closing itself off from international trade and foreign investment

• In china for example, between 1988 and 2008, its trade volumes grew tremendously with an annual expansion rate of 18.1 %. This growth had an impact on poverty reduction.

• The ultimate goal of an open trade policy should involve allowing of free movement of all factors of production (and final consumer products) from surplus to deficit areas

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Trade and its Importance

Botswana Lesotho Tanzania Uganda Zambia

Trade Per capita (US$ 2009-2011) 5634 1520 352 295 987

Export of goods and services 107 136 236 309 134

Import of goods and services 156 142 278 233 168Source: WTO Trade Profile (http://stat.wto.org/CountryProfile/WSDBcountryPFExportZip.aspx?Language=E)

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Trade and its Importance

• According to the WTO trade profile database, the trade performance shows that Zambia lags behind some African countries including Uganda, Tanzania and Lesotho in export growth from 2005 to 2011.

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Trade and its Importance

Growth in Imports and Exports in Bilateral Trade with the US (2011 – 2012)

• The link between trade, development and poverty reduction is still under academic scrutiny

• Theoretically, the connections are clear between trade expansion and its impacts on economic growth and income distribution

• CUTS (2008) on these linkages in Zambia reveal that the closure/improvement of businesses in some sectors of the economy took place after trade liberalisation

• Trade policies can produce both winners and losers.

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Link –Trade, Development & Poverty Reduction

• Trade policy can lead to poverty reduction only if it is treated as an integral part of development equation.

• This highlights the importance of deliberate and strategic inclusion of trade in development planning and implementation

• It is important at this point to understand that this process of mainstreaming should involve a three tier process. – Firstly how trade policy (and identification of trade related priorities)

are/is done/designed. – Secondly, how the development planning process and development

plan is conceived. – Thirdly opportunities for trade mainstreaming.

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Link –Trade, Development & Poverty Reduction “continue”

• It is always important for countries to institute an inclusive and nationally owned trade policy making and implementation process

• In general, the process of trade policy formulation can be described as follows:– MCTI identifies the need for policy reform and writes to the Policy

Analysis/Coordination Division at Cabinet office which is consulted at all stages of the process

– The ministry then outlines the roadmap for the policy reform and may initiate the process through dialogue and consultations with key stakeholders (SAGS and working Groups)

– When the final draft policy has been prepared it is presented before Cabinet for approval. The policy is then published after approval and is enforced on the specified date

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Trade Policy (and Identification of trade related priority areas)

• MCTI has embraced AfT initiatives such as EIF as a catalyst for improved trade outcomes

• The DTIS & Action matrix have been adopted as tools for identification and prioritising of trade potential sectors

• The EIF, through Tier I is assisting Zambia to strengthen her institutional arrangement

• Tier II on the other hand is leveraging resources towards funding key potential projects

• Bridging Macro/Micro Gaps

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EIF/Trade Policy formulation and Implementation

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Understanding the Development Planning Process

Development Planning/Policy Process

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Decision making

M&E

People’s Participation at every level should be guaranteed through a Cleary defined institutional Framework

People’s Participation at every level should be guaranteed through a Cleary defined institutional Framework

• Policy/Development Cycle; At every stage of the policy/development cycle presents an opportunity to mainstream trade;

• Institutional; Capacity of institutions to deliver on trade

• International Cooperation Level; Integrating trade into a development assistance programmes and activities

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Opportunities for Trade Mainstreaming

• Trade mainstreaming should not be looked at in isolation • It should involve how trade policy and identification of priority

areas evolves to how these identified priorities are mainstreamed at every development planning process.

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Conclusion

More importantly each of these processes require effective and inclusive participation of the different processes so at to democratise trade governance

Features listed below are important for trade policy to be called an inclusive trade policy that has national ownership• It should be based on the overall national development policy

(coherence between development and trade policies);• It should be supportive of and be supported by other government

policies dealing with other sectors of the economy and indeed society (coherence between trade and other socio-economic policies);

• It should balance the interests of all key stakeholders (inclusivity and balance);

• It should be in conformity with the commitments of the country under the WTO and other regional and bilateral agreements (harmony with international commitments); and

• It should have an appropriate implementation plan with the commitment of adequate resources

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Conclusion