Trade and Trade Policy A Manual for Parliamentarians in Commonwealth Africa

1. Trade and Trade PolicyA Manual for Parliamentarians in Commonwealth Africa Dr Massimiliano Calì, Overseas Development Institute Regional Workshop for East African ParliamentariansArusha, 27-8 May 2010

2. Why produce a Manual? • The effects of trade permeate through an economy – as does the impact of change to: • supply and demand on the world market; • a country’s trade policy; • other countries’ trade policies. • But the effects: • flow along multiple channels; and • are often complex and indirect. • So it is often hard to track the impact on any particular individual or socio-economic group. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa

3. What’s in it for Parliamentarians? • Parliamentarians are central to the regulation of trade because the decisions are inherently political: • they create winners and losers; • they require wide consultation if they are to be implemented effectively; • they affect tax – and hence also expenditure; and • trade policy must reflect a country’s development strategy. • There is plenty they can do: • governments have only a few instruments that directly channel trade; but • many policies can influence the short- and long-term impact of trade on development; • most of which fall outside the trade portfolio. • Mainstreaming trade policy is essential to reinforce desirable, and minimise negative, effects. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa

4. Scope of the Manual • The Manual moves from underlying questions to trade policy formulation. • The chapters deal in turn with: • why, and what, to trade; • what lessons can be learned from the experience of the fastest-growing states; • how can governments: • influence the impact of trade on their citizens; • shift their country to a more dynamic trade pattern, given that: • it is the private sector that does most trading; • many key forces affecting poor countries are outside direct control. • How can these insights be brought to bear in actual trade policy negotiations: • multilateral (Doha); • African regional groups, Economic Partnership Agreements (EPAs)? • What special role do Parliamentarians have to play in this process? Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa

5. There are no short cuts • The experience of recent decades has challenged much conventional wisdom: • trading manufactures is not ‘good’ and primary products ‘bad’ for development – it all depends on which goods (and services); • there is a role for both ‘the market’ and ‘the state’ – it is the ‘way’ they operate that counts; • regional trade agreements can foster growth, but they may also hinder it. • The ‘big message’ of the Manual is that detail matters: • the detail of trade agreements; • the market niche in which a country trades; • the place of a national firm in its global value chain. • Which poses a challenge for Parliamentarians: • to master the detail; • to communicate it to the electorate. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa

6. Tools for African Parliamentarians • The Manual provides the tools to be applied to many current trade policy questions: • Doha: • what are Africa’s interests; • what are the implications of further delay in completion? • EPAs: • what are the implications for pre-existing African regional groups; • how should governments respond to the revenue challenges? • Global Financial Crisis: • how Africa is affected; • what is needed to make countries less vulnerable to ‘collateral damage’? Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa

7. Some key messages • Politics and communication are at the heart of trade policy – Parliamentarians’ input comes at every stage. • Trade policy: • should reflect national economic priorities, which requires that • it must be translated into a set of negotiable points. • Mainstreaming trade policy is vital: without it negotiators are operating in a vacuum. • Tariff liberalisation always has distributional impacts: • either fiscal expenditure will go down (through spending cuts); or • other taxes will need to increase – with a different incidence from the old taxes. • Parliamentarians need to push for Aid for Trade: so far provision has been underwhelming. Trade and Trade Policy: a Manual for Parliamentarians in Commonwealth Africa

8. Trade and Trade PolicyA Manual for Parliamentarians in Commonwealth Africa Dr Massimiliano Calì, Overseas Development Institute Regional Workshop for East African ParliamentariansArusha, 27-8 May 2010