Implementation Plan in Response to Board-Endorsed Recommendations Arising from the IEO Evaluation of IMF Involvement in International Trade Policy Issues

This paper fulfils the requirement of a forward-looking implementation plan for Board-endorsed recommendations of the IEO Evaluation of IMF Involvement in International Trade Policy Issues (“the Evaluation”). The Evaluation and the Executive Board’s conclusions provide impetus to re-prioritizing the Fund’s trade policy work. Table 1 sets out the Evaluation’s specific recommendations, Directors’ responses to them, and the proposals for implementation within this framework. Directors called for recommendations to be implemented within the existing resource envelope—including by achieving closer and more effective cooperation with the WTO—and this implementation plan therefore does not provide detailed costing of individual items.

Abstract

This paper fulfils the requirement of a forward-looking implementation plan for Board-endorsed recommendations of the IEO Evaluation of IMF Involvement in International Trade Policy Issues (“the Evaluation”). The Evaluation and the Executive Board’s conclusions provide impetus to re-prioritizing the Fund’s trade policy work. Table 1 sets out the Evaluation’s specific recommendations, Directors’ responses to them, and the proposals for implementation within this framework. Directors called for recommendations to be implemented within the existing resource envelope—including by achieving closer and more effective cooperation with the WTO—and this implementation plan therefore does not provide detailed costing of individual items.

I. Introduction

1. This paper fulfils the requirement of a forward-looking implementation plan for Board-endorsed recommendations of the IEO Evaluation of IMF Involvement in International Trade Policy Issues (“the Evaluation”).1

2. The Evaluation and the Executive Board’s conclusions provide impetus to re-prioritizing the Fund’s trade policy work. Table 1 sets out the Evaluation’s specific recommendations, Directors’ responses to them, and the proposals for implementation within this framework.

3. Directors called for recommendations to be implemented within the existing resource envelope—including by achieving closer and more effective cooperation with the WTO—and this implementation plan therefore does not provide detailed costing of individual items. The additional costs of developing guidance notes and refocused collaboration with other organizations are modest, and they represent a partial redirection of the work of current trade policy staff rather than wholly new activities (e.g., Fund staff conducted major reviews of trade policy in 2001 and early 2005 and already meet periodically with counterparts in other international organizations). Some of this reorientation will be accommodated through greater prioritization of country review work on trade policy, in line with the summing up’s suggestion for greater prioritization to address resource requirements. Finally, the overlap and interaction between some of the implementation plan proposals makes it difficult to separate the costs of individual items.

II. Implementation Plan

4. The proposed implementation plan is separated into six areas. These are:

(a) reviews of the Fund’s Work on Trade and guidance to staff; (b) multilateral, regional, and bilateral surveillance; (c) trade policy issues in Fund-supported programs; (d) staffing-related issues; (e) trade policy information; and (f) institutional cooperation.

  • a. Reviews of the Fund’s Work on Trade and additional guidance to staff. The follow-up plan proposes five-yearly reviews of Fund work on trade, beginning in 2014. Prior to that, guidance on financial services and preferential trade agreements (PTAs) would be developed by staff and issued to the Board for information.

  • b. Trade policy issues in Fund-supported programs. Most Directors welcomed the scaling back of trade policy conditionality. Going forward, Directors called for avoiding the use of trade-restricting measures during Fund-supported programs. However, trade liberalization should be promoted where necessary for program objectives. The implementation plan proposes that SPR revise the guidance on trade policy to reflect these views.

  • c. Multilateral, regional, and bilateral surveillance. Directors called for more frequent coverage of cross-cutting trade policy issues in the Fund’s multilateral and regional surveillance vehicles. The follow-up plan proposes that trade policy staff prepare such material on a standalone basis or in collaboration with the departments responsible for the WEO, REOs, and the GFSR as appropriate. Directors called for the coverage of macro-critical trade policy issues, for all countries, and evenhandedness in trade policy advice in surveillance more generally.

  • d. Staffing-related issues. The Evaluation called for a small but “critical mass” of trade policy expertise to be built and a division solely devoted to trade issues. Directors agreed with the need for expertise, but considered that the question of a separate trade policy division was best left to management. The implementation plan proposes that trade policy work continue to be carried out by staff economists able to work effectively on both trade policy and broader macroeconomic issues. Such a balance of skills could be maintained through a mix of recruitment of staff with the relevant skills and on-the-job training, and help to integrate trade policy into the Fund’s broader work.

  • e. Trade policy information. The Evaluation emphasized the need for staff to have ready access to timely and relevant summary trade policy information regarding goods trade, PTAs, and financial services. Directors agreed on the need to develop such access, while encouraging staff to examine various approaches to securing and disseminating this information within the Fund. The implementation plan proposes to emphasize the existing availability of tariff information and to discuss within staff and with the World Bank, WTO, and others the scope for enhanced information and data sharing.

  • f. Institutional cooperation. The Evaluation noted the benefits of close cooperation with the WTO and other international institutions for policy coherence and the efficiency of staff work. Directors welcomed the IEO’s finding that institutional cooperation with the WTO and the World Bank has evolved and should be strengthened further and agreed that occasional meetings on trade with counterparts in other multilateral economic institutions could bring important benefits. In this context, the implementation plan proposes regular meetings be initiated among senior staff of the IMF, World Bank, WTO, and perhaps the OECD and UNCTAD.

5. Directors’ feedback on this implementation plan would be welcome.

Table 1.

IEO Trade Evaluation: Recommendations, Board Response, and Proposed Follow-Up

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Implementation Plan in Response to Board-Endorsed Recommendations Arising from the IEO Evaluation of IMF Involvement in International Trade Policy Issues
Author: International Monetary Fund