Global Policy Forum

By Peter Hardstaff

Confirmation today, as if it were needed, that the WTO Secretariat lives on another planet. For those of you who think that sarcasm is the lowest form of wit, please delete this article before going any further.

A few days ago, the WTO Secretariat published its Trade Policy Review of Zambia. It makes for an enlightening, and frustrating, read. Before reproducing a few choice extracts from the Summary Report, here's a few facts and figures on Zambia...

In Zambia, between 1992 and 1997 maximum tariff levels were cut from 100 per cent to 25 per cent, and all licensing and quantitative restrictions on imports and exports were abolished. During this period, formal sector employment in manufacturing fell by 40 per cent.

Between 1990 and 1999, GDP growth was a measly 1 per cent. Add population growth into the equation and the result was a decline in annual per capita income of 2.4 per cent.

Between 1990 and 2000, imports of goods and services increased from 37 per cent to 46 per cent and exports fell from 36 per cent to 31 per cent.

With these facts in mind, here's the WTO's take on the situation...

Lets start with the WTO Press release, which states:

"WTO members, in their review of Zambia's trade policies on 23 and 25 October 2002, commended the country on its continuing commitment to trade liberalization despite various difficulties".

An all round thumbs up for Zambia then. I'm sure that's a great comfort to those who have lost their jobs.

The Summary Report begins in a similar vein, stating that,

"Since its Trade Policy Review (TPR) in 1996, Zambia has continued to implement its economic reforms launched in 1991. In recent years, the reforms have consolidated the substantial liberalization efforts made during the 1990s".

Excellent another vote of confidence from the WTO but still no mention of poverty. The report then goes on to say,

"In general, the reforms have created an environment conducive to economic growth and made Zambia eligible for debt relief under the Enhanced Heavily Indebted Poor Country Initiative".

Hmmm, excuse me for being picky but isn't a 'conducive' environment for economic growth a little irrelevant if there isn't actually any significant economic growth over a ten year period? Luckily for Zambia, by faithfully following the IMF's economically damaging policy prescriptions, they at least qualify for debt relief! The report goes on to say,

"However, Zambia's macroeconomic performance has not been good."

Ok, now things are getting clearer. But what has this meant for the poor? The report says,

"This poor performance has increased poverty: Zambia's GDP per capita was US$302 in 2000 and the share of its population living under the poverty line increased from 70% in 1991 to 75% in recent years."

"Despite the substantial liberalization of Zambia's trade regime, poor performance by the mining and quarrying sector, and financial difficulties, including depletion of international reserves, have contributed to a decline in the share of its merchandise trade in its GDP from some 62% in 1995 to below 54% in 2000 although an increase to 59% was estimated for 2001."

Right, so the economy has declined and the poor have actually suffered during the last 10 years of liberalisation. Now for the coupdegrace. In light of this desperate situation, the WTO Secretariat concludes that,

"Improvement of Zambia's low level of multilateral commitments, both on goods and services, would increase the predictability of its trade regime and renders its reforms more credible. Continued structural reforms, including privatization, and further tariff rationalization would contribute to better resource allocation. Such efforts will improve Zambia's ability to attract investment."

So, lets just get this straight. The past 10 years of substantial trade liberalisation have seen a drop in per capita incomes, poor trade performance and increased poverty. Clearly what Zambia needs is deeper and more binding trade liberalisation!!

To say that the WTO is 'living in denial' would constitute a gross understatement. The whole organisation is clearly in need of therapy to help them grapple with the realities of 'cause and effect'.

(Further) words fail me.

FAIR USE NOTICE: This page contains copyrighted material the use of which has not been specifically authorized by the copyright owner. Global Policy Forum distributes this material without profit to those who have expressed a prior interest in receiving the included information for research and educational purposes. We believe this constitutes a fair use of any such copyrighted material as provided for in 17 U.S.C § 107. If you wish to use copyrighted material from this site for purposes of your own that go beyond fair use, you must obtain permission from the copyright owner.