Promoting Trade-related Capacity Building in Small States: The Case of Post-liberalisation Adjustment in Preference Dependent Economies

Dr Tony Heron, Principal Investigator, Department of Politics, University of Sheffield, Elmfield, Northumberland Road, Sheffield, S10 2TU, UK, 0114 2221695

Email: T.heron@sheffield.ac.uk

Homepage: http://www.shef.ac.uk/politics/staff/tonyheron.html

Project Summary:

The importance of trade-related capacity building (TRCB) to developing and least-developed countries (LDCs) was affirmed by the World Trade Organisation (WTO) in the 2005 Hong Kong Ministerial Declaration. TRCB refers to financial and technical assistance in areas such as trade policy implementation, infrastructure, productive capacity and trade-related adjustment, and is designed to enable developing countries and LDCs to participate more effectively in world trade. Although funding for TRCB from bilateral and multilateral sources has grown significantly over the last few years, relatively little research has been conducted on the impact - both potential and realised - of this on recipient states. The purpose of this research will be to investigate the effectiveness of TRCB in addressing the trade and investment losses associated with the erosion of non-reciprocal tariff and quota preferences in small, middle-income countries. The research will focus on six cases which have historically enjoyed favourable access to OECD markets as a result of preferential trade, namely, Jamaica, Belize, Swaziland, Lesotho, Mauritius and Fiji.

Although TRCB is neither aimed exclusively at small states nor the problem of preference erosion, it has nevertheless come to assume a special significance in relation to this issue for two reasons. First, while trade liberalisation entails adjustment costs for both large and small developing countries, preference erosion is particularly onerous for small states because they tend to rely on preferential trade more than larger states and also specialise in export sectors that have been subject to recent or ongoing liberalisation pressures. Second, the promotion of TRCB is underpinned by a policy consensus among bilateral and multilateral aid donors which questions the wisdom of preferential trade and suggests that preference-dependent countries are best supported by aid donors in ways that are ‘non-trade distorting’ for third parties.

Against this backdrop, this research will: (1) examine the origins and consequences of trade liberalisation measures affecting preferential trade and map out the social and economic impact of this in the countries identified above; (2) explore the role of TRCB in the post-liberalisation adjustment policies promoted by aid donors and adopted by the countries in question, and assess the extent to which these have been implemented successfully; and (3) evaluate the above both in terms of assisting post-liberalisation adjustment within small states and in facilitating more effective global policy coordination among bilateral and multilateral aid donors.

Research will be carried out in 12 countries covering the Caribbean, Southern Africa, the Indian Ocean and South Pacific, as well as Europe, North America and Australia. It is anticipated that findings from the research will make a major contribution to the international political economy and development studies literatures, while generating policy-relevant empirical findings that will be of interest to a range of stakeholders, including bilateral and multilateral aid donors, think tanks and NGOs.

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	Promoting Trade-Related Capacity Building in Small States: The Case of Post-liberalisation Adjustment in Preference-dependent Economies/Project Overview
Project Overview Curriculum Vitae	Promoting Trade-related Capacity Building in Small States: The Case of Post-liberalisation Adjustment in Preference Dependent Economies Dr Tony Heron, Principal Investigator, Department of Politics, University of Sheffield, Elmfield, Northumberland Road, Sheffield, S10 2TU, UK, 0114 2221695 Email: T.heron@sheffield.ac.uk Homepage: http://www.shef.ac.uk/politics/staff/tonyheron.html Project Summary: The importance of trade-related capacity building (TRCB) to developing and least-developed countries (LDCs) was affirmed by the World Trade Organisation (WTO) in the 2005 Hong Kong Ministerial Declaration. TRCB refers to financial and technical assistance in areas such as trade policy implementation, infrastructure, productive capacity and trade-related adjustment, and is designed to enable developing countries and LDCs to participate more effectively in world trade. Although funding for TRCB from bilateral and multilateral sources has grown significantly over the last few years, relatively little research has been conducted on the impact - both potential and realised - of this on recipient states. The purpose of this research will be to investigate the effectiveness of TRCB in addressing the trade and investment losses associated with the erosion of non-reciprocal tariff and quota preferences in small, middle-income countries. The research will focus on six cases which have historically enjoyed favourable access to OECD markets as a result of preferential trade, namely, Jamaica, Belize, Swaziland, Lesotho, Mauritius and Fiji. Although TRCB is neither aimed exclusively at small states nor the problem of preference erosion, it has nevertheless come to assume a special significance in relation to this issue for two reasons. First, while trade liberalisation entails adjustment costs for both large and small developing countries, preference erosion is particularly onerous for small states because they tend to rely on preferential trade more than larger states and also specialise in export sectors that have been subject to recent or ongoing liberalisation pressures. Second, the promotion of TRCB is underpinned by a policy consensus among bilateral and multilateral aid donors which questions the wisdom of preferential trade and suggests that preference-dependent countries are best supported by aid donors in ways that are ‘non-trade distorting’ for third parties. Against this backdrop, this research will: (1) examine the origins and consequences of trade liberalisation measures affecting preferential trade and map out the social and economic impact of this in the countries identified above; (2) explore the role of TRCB in the post-liberalisation adjustment policies promoted by aid donors and adopted by the countries in question, and assess the extent to which these have been implemented successfully; and (3) evaluate the above both in terms of assisting post-liberalisation adjustment within small states and in facilitating more effective global policy coordination among bilateral and multilateral aid donors. Research will be carried out in 12 countries covering the Caribbean, Southern Africa, the Indian Ocean and South Pacific, as well as Europe, North America and Australia. It is anticipated that findings from the research will make a major contribution to the international political economy and development studies literatures, while generating policy-relevant empirical findings that will be of interest to a range of stakeholders, including bilateral and multilateral aid donors, think tanks and NGOs.
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