RESTRICTEDWORLD TRADE
ORGANIZATIONWT/WGTDF/M/3/Corr.11
12 November 2002
(02-6224)
Working Group on Trade, Debt
and Finance
REPORT OF THE MEETING OF 30 SEPTEMBER 2002
Corrigendum
Page 6, paragraphs 24 and 25
The paragraphs should read as follows:
24. "The representative of Argentina encouraged Members to use to its fullest extent the mandate
given to the Working Group by Ministers. Argentina's interest in the Working Group on Trade, Debt
and Finance was twofold: first, Argentina was its elf a highly indebted country; second, it was
concerned that other countries might find themselves in a similar situation. Argentina acknowledged
the dual aspects of the Group's mandate: that of examining the issues through study, discussion and
assessment and that of making recommendations for measures to be taken within the ambit of the
WTO.  However, Argentina would be less interested in the discussions if the Working Group on
Trade, Debt and Finance limited itself to a simple examination of the issues and avoided drawingrecommendations since only through recommendations – and eventual actions – could the WTO
contribute substantially to assisting Member countries. In this sense, the Group should work as a
"meeting of governments", not as a "seminar".
25. In the opinion of Argentina, the question wa s therefore on which topics the Group should
focus its work: finance was not in itself a problem; debt was.  The Group should focus on trade and
debt. While doing so, the Group should refrain fr om examining too thoroughly areas examined in
other fora, such as debt relief initiatives, sovereign bankruptcy issues and others specific issues that
did not fall within the remit of the WTO. Among the five topics under discussion (six if that of FDI
was included), the one which was most relevant under the mandate provided by paragraph 36 of the
Doha Declaration was that of market access.  Ar gentina considered that countries had two basic
sources of foreign exchange: trade flows and financial flows, the former being the better.  At a certain
level of indebtedness, the conditions for obtaining foreign financing, either from private or public
sources, were prohibitive.  Limitations emanated from very high-risk premiums or from borrowing
limits set out under IFI policies. Under certain circumstances, therefore, special or improved market
access conditions for highly indebted developing countries (albeit with time or product limitations)
should be conceivable.  Consideration of such issues as these, Argentina stressed, fell within themandate of the Working Group."
Page 8, paragraph 36
The paragraph should read as follows:
36. Referring to the questions raised on the mandate of the Working Group, the representative of
India said that in order to come up with a meaningful outcome the Group should focus its discussions
on the need to improve market access for exports of interest to developing and least-developed
                                                     
1 In English only.WT/WGTDF/M/3/Corr.1
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countries, as well as on the need to expand development finance.  Increased market access in
agriculture was part of a solution to debt relief for commodity dependent countries. Attention also
should be given to reducing the use of contingent protection measures by developed countries against
developing countries, to reducing domestic support to agricultural products in developed countries,
and to lowering the incidence of peak tariffs in sensitive products. Members should focus on all theseissues when considering debt relief in the WTO.  Addressing supply-side constraints was also an
important, but not sufficient, condition. He then turned to the Secretariat Note, asking questions on
paragraph 4 (whereby gains to be derived from th e elimination of trade barriers outweigh flows of
ODA and debt relief), paragraph 7 (regarding the gains accruing to countries from the removal of their
own barriers), paragraph 8 (regarding the total amount of gain from a trade round), paragraph 11
(regarding declining terms of trade), and paragraph 15 (regarding the fiscal channel and its revenue
implications). With respect to the role of FDI in deficit management, as alluded to by some
delegations as well as referred to in the presentation, he noted that investment flows had both a
positive and a negative effect on the balance-of-payments. The positive effects included inflows of
foreign capital, increased export earnings and savings from reduced imports. The negative effects
included outflow of profits, royalties and revenues and income, increased imports of capital goods,
intermediate or consumer goods.  So long as inflows of foreign investment exceeded outflows, theeffects on the balance-of-payments would be positive.  As the stock of foreign capital increased, the
tendency towards de-capitalization grew.  He noted  that the linkages between FDI and deficit
management was not a simple one and would require careful analysis. Finally, he said that India had
attempted to address WTO provisions on balance-of-payments from a development point of view, in
particular Article XVIII:B of the GATT.
Page 11, paragraph 49
The paragraph would read as follows:
49. Commenting on the EC contribution, the representative of India said that from the perusal of
the proposal made by the EC, it appeared to his delegation that the proposed examination of the trade,
debt and finance nexus went beyond the mandate of the WTO. He recalled the terms of the mandategiven by Ministers under paragraph 36 of the Doha Declaration, and, in this context, asked for
clarification as to whether the EC proposals were not going beyond that precise mandate. In his view,
the Working Group should only examine and make recommendations on issues falling strictly under
that mandate. The EC paper had also referred to the coherence mandate. He commented that work on
coherence should not expand beyond what had already been approved under the Marrakesh
Declaration on Coherence. Addressing coherence should not in any way constraint the policy space of
developing countries in pursuing what was perceive d by them to be in their national interest, nor
should it result in cross-conditionality on which the Marrakesh Declaration was clear. On the issue of
trade protectionism, developing countries had been facing many difficulties in developing their
agriculture and in achieving their objectives of improving food security and increasing export
earnings. Referring to EC's proposal that transparency in Government Procurement and adequate
domestic regulation of competition were key elements of good governance and its suggestion forconsidering how best to integrate trade into economic reform programmes and ensure WTO
conformity with sustainable growth, he noted that UNCTAD in its Trade and Development Report
2001 had pointed out that "efforts in the past few years have focused on measures designed to
discipline debtors and provide costly self-defense mechanisms. Countries have been urged to better
manage risk by adopting strict financial standards, improving transparency, adopting appropriateexchange rate regimes, carrying large amounts of reserves, and making voluntary arrangements with
private creditors to involve them in crisis resolution. While some of these reforms undoubtedly have
their merits, they presume that the cause of crises rests primarily with policy and institutional
weaknesses in the debtor countries and accordingly place the onus of responsibility for reform firmly
on their shoulders. By contrast, little attention is given to the role played by institutions and policies inWT/WGTDF/M/3/Corr.1
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creditors countries in triggering international financ ial crises". Therefore, it was important that the
Working Group discuss these issues first which had hardly been touched upon. The focus of the
Working Group should be on greater market access for developing countries as the main tool for
solving the problem of the debt overhang, particularly for commodity-dependent countries.
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