From Trade Negotiations to Global Adjustment

Preparatory Phase Summary Report Paris June 14, 2004

World Bank

Presentation David Reed

Following the WTO negotiations impasse in Cancun in September 2003, recent events have reinvigorated multilateral trade negotiations, opening prospects for significant change particularly as regards agricultural commodities. Witness, for example, the WTO dispute panel report in favor of Brazil regarding US cotton subsidies and recent proposals by the European Union to cut export subsidies for agricultural goods if matched by comparable measures from the United States. Undeniably, this momentum for change has also rekindled opposition from domestic producers in some countries and from trading partners who fear loss of preferential treatment should agricultural trade negotiations move forward.

These competing interests will continue to shape trade negotiations in coming months, either advancing or forestalling efforts to liberalize global trade, which many policy makers view as a requisite for maintaining current global economic expansion. Yet while pressures for liberalization may continue to rise, the actual pace and scope of trade reforms remains unpredictable, leaving only the certainty that partial liberalization will characterize the trade regime for years to come.

While the dynamics of negotiations have changed, what has remained constant during the past months is the fact that major adjustments - economic, environmental and social - will be required of all countries, regardless of income level and geographic position, as liberalization of agricultural trade moves forward. While varying from country to country, those adjustments will include changes in economic policy, incentive structures, institutional arrangements and regulatory systems to ensure that high quality growth, environmental sustainability and social equity are supported by trade reforms. Equally constant is the fact that there has been inadequate discussion about and preparation for the adjustments that will be required of trading partners in coming years to respond to new production and marketing patterns and to the associated environmental and social effects.

In this context, the four sponsoring organizations believe that the purposes of the From Trade Negotiations to Global Adjustment initiative remain highly relevant. The objectives that have brought together the World Bank, the Dutch Ministry of Development Cooperation, the International Centre for Trade and Sustainable Development and WWF, have been two-fold:

• First, we have sought to understand, based on available research, the breadth and distribution of economic change that will follow as agricultural trade is liberalized;

• Second, we have developed a work program, through active consultation with key stakeholders, to encourage preparation for the probable economic, environmental and social changes that will be required in a progressively liberalized trade system for agricultural goods.

© WWF-Canon / Hartmut JUNGIUS

In this document, we present an overview of our efforts to summarize the research carried out by international development institutions, trade associations, academic and research institutes, civil society organizations and national governments. These results are presented in three distinct, yet intimately related areas:

- Conclusions from aggregate analysis and research regarding the economic benefits and costs of agricultural trade liberalization.

- Synthesis of research that focused on changes associated with liberalization of three specific commodities - cotton, rice and sugar.

- A summary of proposals and recommendations offered by various organizations to respond to the costs and benefits – economic, environmental and social - of liberalized trade.

The complete studies are offered in the publication that accompanies this document. While having no pretense of covering all research on agricultural trade liberalization, the studies do offer a fairly inclusive review of existing literature. Our findings confirm the pressing need for organized discussion of adjustment policies tailored to individual countries, commodities and environmental settings.

As the reader considers the conclusions presented herein, we would suggest bearing in mind four recurrent limitations, listed below, that characterized existing analysis and research:

• Aggregate studies provide no policy guidance regarding economic adaptations and adjustments nor do they address environmental and social effects associated with specific commodities, economic sectors or geographic regions.

• Commodity studies do, in certain cases, examine price and potential production effects for different regions and countries, notably OECD countries. However, those studies do not consider the impacts of simultaneous price and production changes for more than one commodity in any given country and they do not examine such effects in more vulnerable countries.

• There is scant analysis of the environmental effects of trade liberalization

• The analysis of the impact of agricultural trade liberalization on social structures, particularly on the poor and small producers, in vulnerable countries is very shallow and often non-existent.

These limitations, as the reader will see in the final section of this document, shape the work plan proposed by the four sponsoring organizations.

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PART TWO: rview of Aggregate

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Xavier Maret

ns a key sector of the world economy for 4 percent of world GDP and 9 percent dise exports, with developing countries out 60 percent and 40 percent of these

ely. More precisely, agriculture provides developing countries’ GDP, more than 50 tal employment, and 13 percent of their orts. While it has declined in relative eloped countries, the sector remains a orts and significantly shapes domestic

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sion of agriculture is as important as its ion. Progress in poverty reduction and the er hinge on successful rural and

opment policies, as well as trade reforms. ber of people living on less than US$1 a 40 to 21 percent of the population in

ries between 1990 and 2001, there were r people in 2001. About 70 percent of

n rural areas, relying heavily on ties for their livelihood. Moreover, despite pplies worldwide, 840 million people were nourished in 2000 and 95 percent of them g countries.

agricultural raw materials amounted to 2001, equivalent to 45 percent of total Yet, agricultural markets are affected by rtions and market imperfections. The ed in agricultural markets in the 1970s and ted up to now, with:

domestic support to agriculture, producers in member countries of the

for Economic Cooperation and t (OECD);

ining trend and high volatility of rices; and

of resources and efficiency losses.

been largely ineffective in disciplining key ltural trade, even after the Uruguay Round riculture (URAA) in late 1994. However, inging agricultural policies into trade r the URAA, coupled with commitments

subsidies, domestic support and import ural products, has created a negotiating cive to future progress. Yet, developing ade significant progress in reducing, if not ative protection of their agricultural nt in OECD countries remains an issue.

ill accounted for nearly 50 percent of the cultural production in 2001, and prices

received by OECD farmers were on average 31 percent above world prices in 2002.

There is broad agreement among economists that removal of market distortions and full liberalization of trade will improve welfare, but controversy exists about the distribution of the benefits and about the effects of piecemeal reforms. By eliminating the wedge created between world and domestic prices, trade liberalization allows for a more efficient allocation of world resources and the reversal of welfare losses resulting from distortions. However, second-best economic theory applies in full force, and partial removal of distortions may be welfare decreasing.

Economic analyses of the effects of trade liberalization have relied increasingly on computable general equilibrium (CGE) models. They tend to vary substantially in the magnitude of their results, reflecting various modeling and policy assumptions, as well as different base years for the policy simulations. There is a general consensus that:

• Liberalization will induce a short-term general increase in the international prices of agricultural commodities (of up to 25 percent for wheat, 15 percent for rice, 70 percent for sugar, and 18 percent for beef);

• There should be a sizable world welfare gains from trade liberalization (up to US$1,200 billion in real terms in the context of full trade liberalization, including all merchandise and services, but much lower amounts on average); and

• Benefits will be shared by both developed and developing countries, although those gains might be uneven. The welfare gains are larger in dynamic models with technological change and in the context of multilateral trade liberalization encompassing all aspects of trade, including services.

• However, the impacts of trade liberalization on relocation of aggregate production, poverty, and the environment remain to be treated in a convincing manner.

While there is general convergence on these basic points, the vast majority of studies, notably CGE applications, provide very little, if any, effective input for policy makers. Research has focused on refining methodology and providing factual results rather than looking into their policy implications. Clearly, more work is needed to better account for subsistence farming, market structure, price formation and volatility, upward mobility within the value-added chain for food, and the role of regulatory environment. That said, it is timely and necessary to shift attention to the policy implications of trade liberalization at the regional or country level. Trade liberalization will not address, on its own, issues relating to economic development, income distribution and equity, poverty, and environmental sustainability. Nonetheless, the development and environment communities need to have a better assessment of its positive and negative effects on strategic goals, with a view to discussing concurrent and coherent adjustment policies that would enhance the positive impacts and mitigate the negative ones.

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Part Three: of Commodities –

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ng research concerning three major e, cotton and sugar—reveals the range and social benefits, problems and partial or full agricultural liberalization f these crops has a critical relationship rces and poverty. They cover the gamut d cash crops, tropical and temperate on-food crops, and smallholder and ction. Trade policy and domestic e been common for these crops, distorted patterns of international trade the Uruguay Round has had only a any developing countries have taken s toward liberalization. From their from trade models that estimate price vels, we can predict a number of es. However, the impacts of trade too poorly understood as yet to develop ses to the social and environmental undoubtedly follow.

ventions in agricultural production and have sought to resolve issues of food l development, rural or urban poverty, f foreign exchange. Liberalization may these issues, but often these blems will persist and will be djustment issues relating to structural

ture. To these traditional problems, we stion of environmental sustainability.

eveloped and developing countries can ift to market-based commodity prices.

ited, however, both by the nature of modity markets and by each country’s antage of new export opportunities to als. It is also clear that while some efit, others will experience significant tions.

Review of the three commodity cases finds that:

• Liberalization is expected to lead to short-term international price increases. However, the long-term prognosis is for a continued downward price trend, suggesting that poverty alleviation, and its environmental benefits, will be limited.

• Market chains are complex, and price increases may not reach the farm-gate. When traders and middlemen reap the benefits of price increases and new trading opportunities, there will be little reduction in rural poverty, and no increase in conservation investments at the farm level

• Commodity price and production volatility will probably remain a serious threat to developing country incomes and food security. However, understanding of the impact of liberalization on volatility is still incomplete.

• While the overall welfare gains of liberalization are likely to be small, there will be major shifts in production and processing. These shifts may dramatically change the farming sector in many countries, with major implications for poverty, land ownership, production technologies, and natural resource use.

Meeting these environmental and social challenges will require adjustment based on commodity- and country-specific knowledge. Successful adjustment will be based on knowledge of the environmental impacts of crop production, of the immediate economic impacts of the reform on prices and trading opportunities, and of the long-term socioeconomic response to those changes.

In the short run, production decisions—regarding use of land, labor, water, and agrochemicals, investments in processing and transport networks, and investments in sustainability—will determine the environmental impacts of liberalization. These decisions will be made in consideration of changing commodity prices and input costs at the farm level.

• Inefficient producers facing international competition may reduce the use of agricultural land, with positive environmental impacts, or may lower investments in sustainability.

• Efficient producers enjoying new export opportunities may expand the area in agriculture or increase inputs, with negative environmental impacts. Or they may adopt of more efficient, and perhaps more sustainable, technologies.

© WWF-Canon / Michel GUNTHER

production is traded internationally despite major market distortions. An estimated 60% of world trade enjoys subsidized or protected prices, thanks to preferential access policies and export subsidies. An international price increase of about 40% is expected with full liberalization. Major structural changes are also expected, including a substantial increase in sugarcane production as beet sugar becomes uncompetitive. Thailand, Cuba, Brazil and Australia are likely to be the largest winners in terms of market share. Direct environmental impacts will be felt in these countries, particularly since increases are likely to result from expanded area. Over the long run, changes in incomes and employment will shape environmental outcomes. Countries gaining market share should see a rise in employment. However, many countries that rely on preferential access agreements will be uncompetitive even at the higher world prices. In these countries, loss of employment and export income may dramatically increase poverty, social turmoil, and related environmental impacts. Cotton, like sugar, is a major cash crop, but smallholders play a larger role in its production. Cotton production and processing employ as much as 7% of all labor in developing countries. This crop is often grown in arid areas, but requires substantial amounts of water. Irrigation systems and very heavy pesticide use cause substantial environmental degradation. About one third of raw cotton is traded. Close links with the textile industry mean that most governments have managed cotton production not only as a critical source of rural income and foreign exchange but also as an industrial input. Economic models provide a range of estimates of the price increase expected with liberalization. Removal of US subsidies alone is predicted to increase the world price by over 10%. Full liberalization would lead to production increases in Africa and Uzbekistan, where the environmental impacts will include increased use of land, agrochemicals and irrigation. Impacts on poverty and employment in developing countries are expected to be positive. However, establishing a careful balance between the sustainability of small-scale production and the demands of the global market will be essential to securing the benefits of liberalization and controlling the environmental costs.

Future Agenda

This review of research on three important commodities has highlighted some of the research needs, including some important gaps in the economic and ecological literature, associated with a serious program that encourages adjustment to trade liberalization. The most pressing need, however, is for better understanding of the scope of the social and economic changes that will occur with liberalization, and of the complex and idiosyncratic relationships between these structural changes and the natural environment.

In the long term, trade liberalization will induce important socioeconomic changes that will, in turn, fundamentally reshape the use of agricultural resources. Most economic models only hint at these socioeconomic changes. The critical factors for the environment include impacts on poverty, through prices and structural changes, and capacity to manage natural resources sustainably.

• Where conditions are right for communities to take advantage of international markets, production and price increases can improve rural living standards. Poverty alleviation could facilitate investments in sustainable technologies.

• Some rural areas will increase production but lose employment as competition promotes land consolidation and capitalization, possibly aggravating poverty and environmental degradation. Other rural areas will lose their international markets, with similar impacts on poverty and the environment.

• Many agricultural regions in developing countries will remain far-removed from international markets. Other regions that now produce for distant markets will become uncompetitive after liberalization. These producers may lose local markets, employment, and income, forcing a greater reliance on local natural resources and a decrease in investments in sustainability.

In each of these instances above, adjustment to the new structure of international markets will be needed to ensure the most positive national and local outcome.

Three Cases Rice is the staple food of the 70% of the world’s poor living in Asia and provides a livelihood for millions of rural poor. Environmental impacts include large-scale diversion and use of water, soil degradation, biodiversity loss, and pesticide contamination. Global rice trade is only 6% of production because of widespread government interventions and because of the large number of subsistence-level producers. Liberalization is predicted to increase the rice trade by 10-15%, but is unlikely to change current market trends. Production would continue its shift to developing countries, namely China, Thailand, Myanmar, Cambodia, India and South America. Direct environmental impacts would include increased use of water, inputs, and land, particularly in rain-fed areas. The long-term impacts will depend on the impact of international markets on small farmers. Producers in poor exporting countries will benefit from a price increase of 25-35%. Given the prevalence of small-scale producers in poor Asian countries, the poverty alleviation benefits will be widespread, even though consumers will pay higher prices. In the short run, attention needs to be given to the urban and landless poor, who will be facing higher food prices. In the longer run, the future of the small farmer in a growing international market must be considered.

Cane sugar has been an important source of foreign exchange and employment in many developing countries. Impacts include soil erosion and degradation, and damage to freshwater and marine ecosystems. About 28% of sugar

Part Four: A Summary of Responses and

Recommendations Konrad von Moltke

Developing countries face uncertain challenges and opportunities in relation to the reduction of agricultural subsidies and changes in market access for agricultural products, the central issues in the Doha Round of trade negotiations. Benefits will only be realized from liberalization if measures are adopted now to ensure the necessary adjustment to trade-induced economic restructuring and the social and environmental changes that will follow. While some policy shifts and market responses will be predictable, it is particularly important to develop ways to compensate for the inevitable uncertainties that will accompany changes effected in agricultural subsidies and market access in the context of the WTO, regional agreements or unilateral liberalization.

The WTO Agreement on Agriculture (AoA) includes several provisions that provide countries discretion in the distribution of measures they agreed to undertake, for example through the definition of “boxes” classifying different kinds of subsidies, through the use of the concept of Aggregate Measure of Support (AMS), through the difference between bound tariffs and real tariffs, and through the rules governing the phasing of measures. Flexibility is essential for achieving political acceptance for these measures in OECD countries. Yet, such flexibility also renders difficult the initiation of the process of adjustment in developing countries.

For individual producers affected by the outcomes of full or partial liberalization of agricultural trade, the options and response strategies are fairly clear: improve efficiency; enter other markets; move up the product chain; or leave agriculture. The scope for shifting to other markets is limited for most producers in light of many factors that include: environmental conditions, lack of necessary knowledge, availability of inputs, lack of transport to market, lack of capital for investments, not to mention increased competition from other producers shifting to the same crop. In short, the options for adjustment at this level are limited.

The intersection of the limitations of individual producer adjustments with policy and market uncertainties make it clear that responses to liberalization will need to be developed at a regional and national levels. Effective responses will put a premium on encouraging parallel consultation and adaptation processes that focus on the changes required in individual countries for particular commodities and their markets. Such processes must include representatives from all major stakeholders including producers, traders, consumers, governments, international organizations and public interest groups. Moreover, development agencies, governments and civil society groups, can also support or initiate parallel measures supporting the adjustment process, as discussed below, to reduce the costs and capture the benefits of trade liberalization.

© WWF-Canon / Alain COMPOST

The following sections briefly describe some of the adjustment options open to developing countries which should be supported by the international donor community. A country- and commodity- based process will allow for the development of these and other forms of response to use trade liberalization as a development opportunity and to limit the social and environmental costs.

Negotiations Parallel to the WTO Process

A wide range of international agreements and organizations govern issues such as labor rights, standards, the environment, and human rights. While the rules established by the WTO influence many of these international priorities, the WTO alone cannot be expected to address these issues. Rather, the stability and effectiveness of the international trade regime depend on the functioning of these other regimes. The WTO Appellate Body has stressed that the WTO agreements must not be read in isolation from other international agreements and that the primary obligation is to find interpretations that reflect all relevant international law. Agreements on social and environmental issues should be used to support in adjustment to liberalization.

Another example of a parallel process that has influenced WTO agriculture negotiations is the Cotton Initiative involving four West African countries concerned about the damage caused to them by OECD cotton subsides. This campaign by the four countries, along with allies in the northern nongovernmental community, has forced the issue to the center of subsequent negotiations. This process may provide a model for future efforts to shape the negotiations in favor of promoting poverty alleviation.

Measures Outside International Markets

Much of global agriculture is and will remain outside international markets. Yet domestic agricultural activities, which are critical to the development prospects and food security of most countries, are liable to be influenced by significant changes in international markets. Some of the most dramatic impacts of liberalization are liable to arise from the capture of local and informal markets by international supply chains with potentially serious local consequences. Most of these adjustment measures require a highly decentralized

Create Investment Opportunities with and for the Poor: Public authorities often have resources and can create investment opportunities that will allow the poor to build on their existing assets to become more competitive in emerging markets. Moreover, authorities can provide incentives and institutional mechanisms to attract private investors seeking co-investment arrangements with the poor.

Measures to Promote Sustainable Production and Trade

Countries that benefit from comparative advantage in the production of certain commodities should consolidate their market position to ensure that the attendant expansion and possible intensification of production do not cause environmental harm or dislocate rural communities.

Establish Effective Stakeholder Representation. There is no substitute for stakeholder participation, in particular when attempting to deal with issues that require a balancing of local priorities with broader national and global developments. Such representation must include structures for the articulation of special interests—of producers, laborers, traders, processors, consumers, environment, etc.—and for discussion between these interests on how to pursue public welfare goals.

Ensure the Internalization of Costs. The internalization of all costs is essential to avoid misallocation of resources, lack of funds for essential public goods and the development of subsidy effects. The policy tools for internalization are by now quite well known, but they require a structure of good governance to ensure that they are equitably and effectively implemented.

approach that responds to differences in local conditions, including differences in social structures, economic patterns, and environmental factors. Many of these measures also require concerted commitments from local and national public agencies.

Strengthen Subsistence Farming. It appears paradoxical to recommend strengthening subsistence farming as a response to the liberalization of agricultural trade and the greater integration of global agricultural markets. Yet a large number of people will remain dependent on subsistence agriculture, including a disproportionate number of the world’s poor. Moreover productivity of subsistence farming is low and can be improved by modest targeted measures that have to be managed on a highly decentralized basis.

Promote Local Markets. Many subsistence and small-scale farmers depend on local markets to generate funds that they need to be able to participate on the margins of the cash economy. The vitality of these markets is of critical concern as the global agricultural system changes under the impact of liberalization. Protect the Existing Assets of the Rural Poor: Protecting the access of the rural poor to land, water, fishing grounds and other productive assets through institutional reform and strengthening is critical to helping the poor adjust to trade-induced market reforms. This is particularly important in light of influence exerted by privileged groups over national, sub-regional and local institutions that control natural resource access. Strengthen the Management Capacity of the Poor: Public authorities are uniquely placed to provide opportunities to strengthen the ability of the small producers to increase their management capacity. Moreover, public officials can provide diverse incentives to encourage development of co-management systems with the private sector and government agencies to increase the competitiveness of the poor under changing market conditions.

© WWF-Canon / WWF Madagascar

PartThe Proposed

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Five: Work Programd Reed

us to several conclusions rk program whose purpose is ic, environmental and social trade reforms. Foremost, the g attention at present is not re are many areas where y helpful. Rather the most existing knowledge into g those understandings in the that stand to experience nder a liberalized agricultural pose below three k over the next three years.

tions of existing studies on h our work on rice, cotton and od the relatively limited public sis, we propose extending of 12 major agricultural ce, cotton and sugar be given to four principal

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incrementally, albeit unevenly, over the coming five to ten years.

• Applying the analyses at the national level: The national level work begins with application of information regarding price and production trends for specific commodities in up to 12 selected countries such that the potential effects of those changes on the economy will be examined. We have selected countries where no fewer than two and as many as four commodities will be considered. Key analytical issues will include:

− Impacts of incremental opening of markets and removal of subsidies on producers, large and small, of selected commodities.

− Impacts on national output, government revenues, and development strategies, particularly as regards the agricultural sector.

− Potential impacts on the environment caused by changes in agricultural production regimes.

− Potential impacts on labor markets, poverty, and poverty reduction strategies.

National institutes and agencies will carry out this work in direct consultation with key stakeholders and with support from the institutions sponsoring this initiative.

• Developing policy responses and recommendations: In light of the anticipated impacts, national applications will identify possible responses and recommendations regarding:

− Environmental management, protection and mitigation programs.

− Social policy adaptations and adjustment of poverty reduction strategies.

− Legal and institutional reforms including land reform, indigenous peoples, regulatory systems, etc.

− Agricultural sector development options, including the social organization of production to ensure opportunities for small producers.

© WWF-Canon / Michel GUNTHER

• Developing an analytical approach: Based on the 8-12 country experiences, the initiative will derive a broader analytical/decision-making approach that can be used by policy-makers and affected stakeholders to help adaptations in other countries. This decision-making approach would be subsequently reviewed and applied in other countries as appropriate.

3. Consultations and multi-stakeholder processes

Ultimately, this initiative seeks to encourage adaptation to probable economic changes induced by trade reforms to ensure that environmental sustainability and social equity are the hallmarks of a liberalized agricultural trade regime. To this end, a fundamental part of this initiative is to use the foregoing analysis and policy development process to organize public, multi-stakeholder processes to ensure that governments, producers and civil society groups consider fully the probable impacts of trade reforms, and to encourage public discussion regarding the most appropriate public and private responses to those changes.

Consultations and multi-stakeholder processes will unfold in the following areas:

• National contexts: The results of applied analysis and possible responses and recommendations would be the focus of broad-based consultations in each of the selected countries. Consultations would include government offices, producers and trade associations, and a range of groups from civil society. The purpose of the consultations would be to discuss and encourage agreement on policy, institutional and regulatory responses that would protect the interests of broadest sectors of each society.

• Commodity-specific processes: The initiative will support existing commodity-based alliances, such as edible oils and coffee, or encourage new alliances that bring together the wide range of key stakeholders actually involved in the production and supply chains of selected commodities. Using the cotton initiative as a leading experience, the initiative would select 3 or 4 additional commodities around which multi-stakeholder processes would be reinforced or organized.

This work program is submitted for review, comment and revision. Following the initial consultation in Paris in June, a subsequent set of consultations will be carried out in developing countries with representatives from government, the private sector and civil society. In the fall, a consultation with civil society organizations involved in trade issues will also be organized in Europe. Each of these consultations will strengthen the final work program and help organize participation in subsequent stages of this initiative. We will also take appropriate steps to ensure coordination and cooperation with other trade-related initiatives currently under way. We look forward to receiving your direct input and contributions in shaping the final work program.

Countries suggested for the application and adaptation work, to be carried out over a two-year period, include the following:

Developing/least developed countries

Vietnam (coffee, shrimp, rice) Pakistan (cotton, wheat, sugar) Cote d’Ivoire (cocoa, wood pulp) Mali/Burkina Faso (cotton, rice) Jamaica/Cuba/Caribbean (sugar, bananas) Peru (cotton, coffee, sugar) Kenya/Tanzania (corn, coffee, tobacco) Guatemala (coffee, sugar, corn) Uganda (palm oil, coffee, cotton) Uzbekistan (cotton, wheat) Indonesia (rice, palm oil, shrimp, wood pulp)

Middle-income countries

China (wheat, shrimp, soy, tobacco, rice) Brazil (cotton, soy, tobacco, sugar, oranges) India (cotton, rice, sugar)

OECD countries: To be included only as regards environmental and social adjustment policies, but not to include analytical work to determine price/redistribution impacts given the advanced research already carried out by trade associations and government agencies:

US (cotton, sugar, rice, corn, wheat, soy, other) EU (wheat, corn, sugar, beef, other) Japan (rice, shrimp, other)

Participating institutions: The Department for Environment and Water in the Netherlands Ministry of Foreign Affairs contributes to poverty reduction from an ecological perspective, including addressing the environmental impacts and benefits of trade liberalization. The mission of the International Centre for Trade and Sustainable Development (ICTSD) is to advance the goal of sustainable development by empowering stakeholders in trade policy through information, networking, dialogue, well-targeted research, and capacity building and thereby influence the international trade system. The World Bank's Environmentally and Socially Sustainable Development (ESSD) Network comprises three areas: Environment, Rural Development, and Social Development. The goal of ESSD is to contribute to the Bank's mission of fighting poverty by improving poor people's livelihoods, health, and security today and in the future. WWF's Macroeconomic Program Office (MPO) seeks to promote conservation and sustainable development by integrating environmental sustainability and social equity into the formulation and application of development strategies at national and international levels.

For further information, please contact: David Reed at NtoA@wwfus.org Ricardo Melendez at rmelendez@ictsd.org About the Authors:

David Reed, PhD, is the Director of WWF-MPO andhas directed numerous studies, lectured widely, and published numerous books on structural adjustment, macroeconomic change, poverty, and the environment.

Xavier Maret, PhD, is Visiting Senior Policy advisor for WWF-MPO and is currently on sabbatical from the International Monetary Fund where he has worked since 1989.

Pamela Stedman-Edwards, PhD, has written extensively on the relationship between government policies and natural resource use in the agricultural sector.

Konrad von Moltke, PhD, is a Senior Fellow at WWF-US and the International Institute for Sustainable Development. Since 1990, his work concerns the relationship between trade, investment, development assistance and sustainable development.

Cover Photos:

© WWF-Canon / Edward PARKER © WWF-Canon / Michel GUNTHER

© WWF-Canon / Juan PRATGINESTOS