OREANDA-NEWS. On February 27, 2015, the Executive Board of the International Monetary Fund (IMF) discussed the five-yearly Review of the Role of Trade in the Work of the Fund. This review follows the Board-endorsed recommendations and proposed implementation plan arising from the 2009 IEO Evaluation of IMF Involvement in International Trade Policy Issues. The staff paper provides a broad overview of the role of trade and trade policy issues in the work of the Fund over the past five years and discusses how to integrate and operationalize the implications of the changing global trade landscape at the Fund. The paper focuses on macro-critical trade issues and proposes to introduce a work agenda for the next five years. Based on the staff paper, the Board’s discussion focused on how to make trade an essential element of the IMF’s operational work and to further develop a work agenda for the Fund.

Following the Executive Board’s discussion, Ms. Christine Lagarde, Managing Director and Chair, stated:

“Executive Directors welcomed the review of the role of trade in the work of the Fund and broadly agreed with its main findings. They noted that the trade landscape has changed rapidly in recent years. Directors considered that trade is an essential component of the global policy agenda to bolster growth and saw a need to reignite the multilateral trade system. They noted that there are potentially large global gains to be derived from further trade liberalization and integration, including from traditional trade liberalization in many countries and sectors, lowering barriers in new trade policy frontiers, and additional expansion of global supply chains. Directors also noted that trade reforms can complement and augment the benefits of other structural reforms, spur additional infrastructure investment, and support the strengthening of policy and institutional frameworks.

“Directors welcomed the high quality and policy-relevant work done by the Fund. They emphasized that the Fund’s work in this area should remain within its mandate, addressing trade issues deemed macro-critical and taking into account resource constraints and limited trade expertise. This would require careful prioritization and continued collaboration with other international institutions, including the World Trade Organization and the World Bank.

“Directors emphasized that the coverage of trade issues in Fund surveillance should be tailored to the specific needs of individual countries. Recognizing differences across countries, Directors noted that for advanced countries, a key issue would be the implications of their efforts to pioneer and advance new trade policy areas such as services, regulations, and investment. For emerging market economies, there are still benefits from traditional liberalization and anchoring to global supply chains. For low-income countries, greater integration requires sustained efforts to reduce trade costs, including upgrading trade infrastructures and improving economic institutions both at national and regional levels, supported by relevant technical assistance.

“Directors agreed that better embedding trade in surveillance work would require a concerted effort on several fronts. They saw merit in enhancing efforts to translate key implications from the evolving trade landscape and continuing analytical work, and in further developing a work agenda for the Fund for the next five years based on the key considerations discussed. Several Directors suggested that staff should consider a range of issues for further work. Some Directors were open to having a clearer institutional view. In this regard, Directors noted that the 2010 reference note on trade policy will be updated to provide staff guidance on macro-relevant trade and trade policy issues. Directors stressed the importance of ensuring that the Fund’s approach to trade policies is evenhanded. Going forward, Directors considered it important to regularly review the role of trade in the Fund’s work.”