To: Organizations addressing Trade-Finance Linkages

1) Trade as a channel of financial vulnerability highlighted by conference

outcome

2) Second Aid for Trade Review scheduled for next week

3) Aid for Trade is good news in spite of crisis, OECD says

4) Role of trade in financial crisis addressed by Mauritius Central Bank chief

5) Invitation: IMF involvement in International Trade Policy Issues --

Evaluation

1) Trade as a channel of financial vulnerability highlighted by conference

outcome

Trade-related aspects of the financial crisis were a central issue addressed by a

consensus outcome adopted at the UN World Conference on the Financial and
Economic Crisis, held last week in New York. Throughout the negotiations,
though, the inclusion of trade issues had not always been a given. Clear language
of the modalities resolution called on the conference to explore present and future
impacts of the crisis on trade and investment. Likewise the UN Commission of
Experts whose report provided substantial input into the conference made several
references to the linkages between trade and finance (for a detailed analysis visit
http://www.coc.org/node/6373). But still trade references were highly resisted by
developed countries throughout the negotiations.

An important achievement was the specific recognition of the financial vulnerability

in which trade reforms of the last three decades have placed developing countries.
The outcome acknowledged the role of the "fall in exports and loss in export
revenue, diminishing access to trade finance, reduction in export-oriented and
infrastructure investment, lower fiscal revenues and balance of payments
problems."

Other commitments made in this context are, however, less significant. For
example, governments agreed to refrain from protectionist measures, a call of
dubious value given that some the Group of 20 did it twice in the last 8 months and,
yet, reportedly protectionist measures continue on the rise. The same could be
said of an "early, ambitious, successful and balanced conclusion" of the WTO
Doha Round. This issue would have to be taken up in the World Trade
Organization where the proposals of different key players have long ago ruled out
the possibility of a "development" outcome, much less its relevance to the ensuing
financial crisis.

On the other hand, the document states countries "facing an acute and severe
shortage of foreign reserves" should not be denied right to use "legitimate trade
defense measures in accordance with relevant WTO provisions, and, as a last
resort, impose temporary capital restrictions..."

The language on policy space also makes significant progress over the one
existing since the UNCTAD 2004 Conference in Sao Paulo. It recognizes that
disciplines, commitments and global market considerations "have presented
challenges to many developing countries seeking to fashion a national responses
to the financial and economic crisis." Among the constraints that these disciplines
pose for governments and that they need to evaluate in such arrangements are
those necessary to a recovery from the crisis, to address human and social
impacts, safeguard progress achieved towards the MDGs or regulate local financial
markets, institutions, instruments and capital flows.

The document also made progress on the macroeconomic and exchange rate
challenges that affect developing countries' trade prospects. Addressing the need
to overcome the insufficiencies and inefficiencies of the global reserve system, the
agreement calls for study of the feasibility and advisability of an alternative one
where Special Drawing Rights (SDRs) would play some function. This would have
to be complemented, in the assessment of the UN Commission of Experts, by a
mechanism for coordination between surplus and deficit countries and allowing
capital controls.

But also the role of regional arrangements in such a new system receives mention.
Indeed, one of the most promising elements in the text that echoes calls from civil
society is its consensus on accepting regional and sub-regional "commercial and
reserve currency arrangements," as a crucial contribution to the multilateral
response to the current crisis and to improved resilience to potential future crises.
Recently, Brazil and China had subscribed an arrangement to pay for their trade in
domestic currencies. The broader pursuit of regional systems for payments that
allow countries to settle international trade transactions with their domestic
currencies, on the basis of regional or South-South units of account, is crucial for a
more equitable reserve system, while helping boost intra-regional trade. As stated
by a number of civil society organizations on the eve of the conference (see below)
"Ultimately, a more balanced and development-oriented system for multilateral
management of exchange rates will be one that builds on, and seeks to gradually
coordinate, a system that effectively addresses the need for South-South regional
currencies and currency units."

But the task only begins, as these other commitments will become the subject of a
follow up mechanism in an ad hoc open-ended working group of the General
Assembly that was also set up by the conference.

For a piece assessing the outcome of the World Conference last week from a more
general perspective visit http://www.coc.org/node/6402
For a statement on Trade -Finance linkages signed by over fifty organizations and
submitted in advance of the conference, visit http://www.coc.org/node/6386

For other civil society statements, including the CSO Background Document and
Key recommendations prepared by the Global Social Economy Group see
http://www.ffdngo.org/

2) Second Aid for Trade Review scheduled for next week

Next week, on July 6-7, the WTO is getting ready for its Second Global Review of
Aid for Trade.
Coming against a very different backdrop than the buoyant global economy that
accompanied the first Global Review (November 2007), the review's stated
objectives are:
Moving from commitment to implementation
Integrating trade in national and regional development strategies
Sustaining aid flows during the global economic downturn
Assessing the effectiveness of Aid for Trade

As was the case in 2007, the review has been preceded by a number of regional
reviews, that were carried in partnership with the respective regional development
banks.

For the press release containing the announcement see

http://www.wto.org/english/news_e/pres09_e/pr560_e.htm

3) Aid for Trade is good news in spite of crisis, OECD says

In a piece appeared on one of its newsletters, the OECD anticipates findings of the
Aid for Trade Review to be launched next week in Geneva. It claims that despite
the current economic crisis, the survey - the second Global Review of Aid for Trade
- shows that in 2007, total aid for trade reached USD 25.4 billion - USD 4.3 billion
(21%) more than the 2005 baseline. In the same year, non-concessional loans
provided a further USD 27.3 billion in trade-related financing.

Read the full article at http://www.oecd.org/dataoecd/43/52/43150493.htm#aft

4) Role of trade in financial crisis addressed by Mauritius Central Bank chief

In a presentation to the Mauritius business community the Central Bank governor

of Mauritius, Mr. Rundheersing Bheenick focused on the role of trade in the
financial crisis.

Read his full presentation at http://www.bis.org/review/r090626d.pdf?noframes=1

5) Invitation: IMF involvement in International Trade Policy Issues --

Evaluation

Center of Concern and the IMF Independent Evaluation Office invite you to

IMF Involvement in International Trade Policy Issues:

Presentation by the Independent Evaluation Office of the IMF
Room HQ2 3-B-838B, IMF, 1900 Pennsylvania Ave NW
Friday, July 17, 2009, 11:00 am

The Independent Evaluation Office of the International Monetary Fund (IMF)

recently completed an evaluation of IMF involvement in international trade policy
issues. The IMF Executive Board discussed the report and IMF management's
response on June 8, 2009.

The evaluation examined the IMF's involvement in trade policy issues since the
establishment of the WTO. Among the specific questions it considered were:
Does the IMF have a mandate to be involved in trade policy issues?
How well did cooperation with the WTO and World Bank work? How
serious were the gaps and overlaps between the work of the three institutions?
Was IMF advice and conditionality on trade policy well thought out,
clearly linked to macroeconomic outcomes, and evenhanded across countries?
Was IMF advice and conditionality on trade policy effective?

Susan Schadler (evaluation team leader) and Ling Hui Tan (coauthor) will present
the findings and recommendations from the evaluation on Friday, July 17, 2009, at
11 am. The event will be chaired by Aldo Caliari, Director of the Rethinking Bretton
Woods Project at the Center of Concern.
The evaluation documents, along with the Chairman's summing up of the IMF
Board discussion, are available at http://www.ieo-
imf.org/eval/complete/eval_06162009.html

You are cordially invited to attend this presentation. Please register through
Annette Canizares, e-mail: acanizares@imf.org, tel. (202) 623-7312 by
Wednesday, July 15, 2009.

Please find a flyer at http://www.coc.org/system/files/IEO-Trade-Evaluation.PDF

Aldo Caliari
Director
Rethinking Bretton Woods Project
Center of Concern