IEO
Independent Evaluation Office
of the International Monetary Fund
IMF INVOLVEMENT IN INTERNATIONAL TRADE POLICY ISSUES
EVALUATION UPDATE 2019
ABOUT THE IEO
Established in 2001, the Independent Evaluation Office (IEO) of the IMF conducts independent and objective evaluations of the IMF’s policies, activities, and products. In accordance with its terms of reference, it pursues three interrelated objectives:
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► To support the Executive Board’s institutional governance and oversight responsibilities by contributing to accountability.
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► To enhance the learning culture within the Fund by increasing the ability to draw lessons and integrate improvements.
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► To strengthen the Fund’s external credibility through enhanced transparency.
For further information on the IEO and its ongoing and completed evaluations, please see IEO.IMF.org or contact the IEO at +1 202.623.7312 or at IEO@IMF.org.
This report is the tenth in an IEO series that revisits past evaluations. Reports in this series aim to determine whether the main findings and conclusions of the original IEO evaluation remain relevant, and to identify any outstanding or new issues related to the evaluation topic that merit continued attention. These assessments do not provide recommendations and are typically based on desk reviews of IMF documents and interviews of IMF staff and members of the Executive Board. This report reviews the 2009 IEO evaluation of IMF Involvement in International Trade Policy Issues.
IEO
Independent Evaluation Office
of the International Monetary Fund
IMF INVOLVEMENT IN INTERNATIONAL TRADE POLICY ISSUES
EVALUATION UPDATE 2019
©2019 International Monetary Fund
CATALOGING-IN-PUBLICATION DATA
IMF LIBRARY
Names: Casas, Miguel de Las, author. | Rustomjee, Cyrus, author. | Chen, Yishu, author. | Kwang Yeon Lee, author. | International Monetary Fund. Independent Evaluation Office, issuing body. | International Monetary Fund, publisher.
Title: IMF involvement in international trade policy issues : evaluation update 2019 / [prepared by Miguel de Las Casas and Cyrus Rustomjee, with contributions from Yishu Chen and Kwang Yeon Lee].
Other titles: Evaluation report (International Monetary Fund. Independent Evaluation Office).
Description: Washington, DC : International Monetary Fund, 2019. | Evaluation report. | Includes bibliographical references.
Identifiers: ISBN 9781513522203 (paper)
Subjects: LCSH: Commercial policy. | Commercial policy—International cooperation. | International trade. | International Monetary Fund—Evaluation..
Classification: LCC HF1411.I44 2019
Publication orders may be placed online, by fax, or through the mail:
International Monetary Fund, Publication Services
P.O. Box 92780, Washington, DC 20090, U.S.A.
Tel: +(1) 202.623.7430 | Fax: +(1) 202.623.7201
E-mail: publications@imf.org
Contents
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FOREWORD
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CONTRIBUTORS
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ABBREVIATIONS
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EXECUTIVE SUMMARY
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1. INTRODUCTION
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2. THE 2009 EVALUATION: KEY FINDINGS AND RECOMMENDATIONS
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3. INTERNATIONAL TRADE AND TRADE POLICY ISSUES: A DECADE OF CHANGE
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4. TEN YEARS OF IMF TRADE-RELATED WORK: AN ASSESSMENT
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Mandate and Guidance
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Trade Policy Issues in Surveillance
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Trade Issues in Other Fund Activities
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Communications and Advocacy
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Relations with Partners
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Institutional Issues
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5. CONCLUSIONS, CHALLENGES, AND OPPORTUNITIES
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BOXES
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1. Summary of Recommendations of the 2009 Evaluation
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2. IMF Work on Trade in the G20 Context
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FIGURES
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1. International Trade Policy: Timeline of Selected External Events, 2000–19
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2. World Economic Outlook Reports: Text Analysis of Trade Policy Issues, 2000–19
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3. Regional Economic Outlook Reports: Text Analysis of Trade Policy Issues, 2004–19
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4. Attention to Trade Policy in Article IV Reports, 2010–19
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5. Trade Policy Issues in Article IV Reports, 2010–19
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6. Article IV Reports: Text Analysis of Trade Policy Issues, 2000–19
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7. Selected Issues Papers: Text Analysis of Trade Policy Issues, 2000–19
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8. Working Papers by Authoring Department, 2000–19
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9. Working Papers: Text Analysis of Trade Policy Issues, 2000–19
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10. Managing Director’s Speeches and Global Policy Agendas: Text Analysis of Trade Policy Issues
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ANNEXES
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1. Recommendations, Executive Board Response, and Proposed Follow-Up.
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2. Compendium of Selected IMF Work on Trade Policy Surveillance
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3. Underpinnings for the Fund’s Work on Trade in the Articles of Agreement
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4. Trade Policy Text Analysis
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REFERENCES
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STATEMENT BY THE MANAGING DIRECTOR
The following conventions are used in this publication:
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► An en dash (–) between years or months (for example, 2017–18 or January–June) indicates the years or months covered, including the beginning and ending years or months; a slash or virgule (/) between years or months (for example, 2017/18) indicates a fiscal or financial year, as does the abbreviation FY (for example, FY2018).
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► “Billion” means a thousand million; “trillion” means a thousand billion.
Some of the documents cited and referenced in this report were not available to the public at the time of publication of this report. Under the current policy on public access to the IMF’s archives, some of these documents will become available three or five years after their issuance. They may be referenced as EBS/YY/NN and SM/YY/NN, where EBS and SM indicate the series and YY indicates the year of issue. Certain other types of documents may become available 20 years after their issuance. For further information, see www.imf.org/external/np/arc/eng/archive.htm.
As used in this evaluation report, the terms “country” and “state” do not in all cases refer to a territorial entity that is a state as understood by international law and practice.
Foreword
In recent years, trade issues have been high on the global economic policy agenda amid a loss of political support for multilateral trade liberalization, increasing trade tensions and a rise in protectionist measures. This update of the IEO’s 2009 evaluation of IMF Involvement in International Trade Policy Issues finds that the IMF has responded impressively to these challenges and has played a prominent role in championing a continued commitment to an open, rules-based multilateral trading system. The Fund’s attention to trade policy issues has expanded significantly in bilateral and particularly multilateral surveillance, notably for countries with the largest shares of global trade. The Fund has sought to maximize its impact and influence on trade issues by working closely with partner institutions, building on its technical expertise in modelling the global impact of trade-related uncertainty and its platform for high-level advocacy.
The global trade environment remains under heavy stress and it is uncertain how the current trade tensions will be resolved. The Fund will therefore need to sustain its efforts on the trade policy front and consider how to increase the overall impact of this work, particularly since the next few years could be crucial to preserve an open, rules-based system.
Among key challenges for the Fund, the report emphasizes contributing to efforts to foster a recommitment to trade policy cooperation consistent with a healthy global economy; further efforts to translate multilateral surveillance into bilateral policy advice, particularly outside the largest trading economies; consolidating close cooperation with other institutions; and devoting more attention to rapidly developing issues such as the macroeconomic implications of digitization and e-commerce and the linkage between trade policies and migration issues.
I am pleased that the Managing Director, in her response to our update, has shared our overall assessment of the IMF’s trade work and concurs that the remaining challenges need continued attention and collective commitment.
Charles Collyns
Director, Independent Evaluation Office
Contributors
This report was prepared by Miguel de Las Casas and Cyrus Rustomjee, with contributions from Yishu Chen and Kwang Yeon Lee. Arun Bhatnagar provided administrative assistance, and Roxana Pedraglio and Esha Ray provided editorial and production management assistance.
The report was approved by Charles Collyns.
Abbreviations
| AFR |
African Department, IMF |
| APD |
Asia and Pacific Department, IMF |
| ECF |
Extended Credit Facility |
| EFF |
Extended Fund Facility |
| EU |
European Union |
| EUR |
European Department, IMF |
| FAD |
Fiscal Affairs Department, IMF |
| FCL |
Flexible Credit Line |
| FTA |
free trade agreement |
| G20 |
Group of Twenty |
| GFC |
global financial crisis |
| GPA |
Global Policy Agenda |
| GTS |
global trade system |
| GVC |
global value chain |
| IMS |
international monetary system |
| ISD |
Integrated Surveillance Decision |
| ITGS |
international trade in goods and services |
| LIC |
low-income country |
| MCD |
Middle East and Central Asia Department, IMF |
| MD |
Managing Director |
| MONA |
Monitoring of Fund Arrangements Database |
| MTS |
multilateral trade system |
| NTM |
non-tariff measure |
| OECD |
Organisation for Economic Co-operation and Development |
| PLL |
Precautionary and Liquidity Line |
| PTA |
Preferential Trade Agreement |
| PRGF |
Poverty Reduction and Growth Facility |
| PSI |
Policy Support Instrument |
| REO |
Regional Economic Outlook |
| RES |
Research Department, IMF |
| RTA |
regional trade agreement |
| SBA |
Stand-By Arrangement |
| SDGs |
Sustainable Development Goals |
| SIP |
Selected Issues Paper |
| SPR |
Strategy, Policy and Review Department, IMF |
| SPRXP |
External Policy Division of SPR, IMF |
| STA |
Statistics Department, IMF |
| TIM |
Trade Integration Mechanism |
| TPP |
Trans-Pacific Partnership |
| UFR |
use of Fund resources |
| UNCTAD |
United Nations Conference on Trade and Development |
| WEO |
World Economic Outlook |
| WHD |
Western Hemisphere Department, IMF |
| WP |
Working Paper |
| WTO |
World Trade Organization |
Executive Summary
The Independent Evaluation Office completed an evaluation of IMF Involvement in International Trade Policy Issues in 2009, in the wake of the global financial crisis and a severe collapse in global trade, following decades of strong trade growth. Since then, the global economy has revived while the composition and structure of international trade have continued to evolve, responding to new technologies and opportunities, but trade has not regained its former dynamism. With increasing concern about potential winners and losers from trade, there has been a loss of political support for globalization, increasing trade tensions and a rise in protectionist measures, with the institutional framework that has underpinned multilateral trade for decades coming under heavy strain.
This update to the 2009 evaluation concludes that overall the IMF deserves considerable credit for its active and timely response to the challenges posed by these developments, as it has come to play a prominent role in championing a continued commitment to an open, rules-based multilateral trading system. The Fund has largely implemented the recommendations of the 2009 evaluation and has strengthened and consolidated its trade policy analysis and advice, particularly in recent years as stress on the trading system has mounted and posed increasing risks for macroeconomic performance. Consistent with the Fund’s mandate and comparative advantage, this work has appropriately focused on analyzing the key macroeconomic effects and associated risks of trade policy developments at the national and international levels.
IMF advocacy on trade has been underpinned by a major expansion in attention to trade policy issues in multilateral surveillance since 2015, supported by high-quality, in-depth research and analysis building on the Fund’s well-established global macroeconomic modeling capacity. After a period of relatively limited attention, coverage of trade policy issues in bilateral surveillance has also risen considerably, particularly in countries with the largest shares of global trade that have been the focus of recent trade tensions, with sharply increased analysis of outward spillover impacts from trade measures. The quality and influence of trade work have benefited from reinvigorated working relationships with partner institutions over the last four years. Internally, the Fund’s organizational structure and resources devoted to trade, while stretched thin, have generally sufficed, although research on some emerging trade policy issues has been postponed.
Notwithstanding these efforts, the global trade environment remains under heavy stress and increasingly clouds the global outlook. It is highly uncertain how the current trade tensions will be resolved and how governance of the multilateral trade system will evolve. Moreover, technological innovation and the rise of services will imply continued rapid evolution of trade patterns and increase the complexity of trade policies further. Tus, the Fund will need to sustain its current high level of advocacy and analysis on trade policy issues and consider how to increase the overall impact of this work, particularly since the next few years could be crucial to preserve an open, rules-based, multilateral system.
Key challenges for the IMF include: contributing to efforts to foster a recommitment to workable approaches for trade policy cooperation consistent with a healthy global economy; further attention to translation of multilateral surveillance into bilateral policy advice, particularly outside the largest trading economies; consolidating relations with partner institutions while mitigating key-person risk; and paying more attention to rapidly developing issues such as the macroeconomic implications of digitization and e-commerce and the linkage between trade policies and migration issues. Across all these dimensions, care will be needed to ensure appropriate evenhandedness in trade policy surveillance across countries.
Given these challenges, the continuing value-added and coherence of the IMF’s work on trade policies could benefit from a holistic review of the IMF’s “trade strategy” for discussion by the Executive Board, which would consider the Fund’s role, objectives, and priorities for trade work in the evolving global context. Such an assessment would help to guide staff work and the appropriate allocation of scarce resources to trade policy issues among competing priorities. The upcoming five-yearly trade policy review, anticipated for 2020, provides a timely opportunity for this purpose.