Convergence of the Trade and Finance agendas

Nancy Alexander

How The World Bank Group’s Facilitationof the Trade Agenda Undermines the Bargaining Power ofDeveloping CountriesIn February 2002, the World Bank Group adopted a Private Sector Development (PSD) Strategy that undermines the bargaining power of, and facilitates concessions by, developing countries in WTO negotiations.

The Strategy expanded the Bank’s work programs in procurement, domestic regulation, and services; it also launched a third generation of adjustment lending focused on liberalizing investment regimes. These topics relate directly to WTO negotiations around expansion of existing agreements such as the General Agreement on Trade in Services (GATS) and proposed new issues such as investment and transparency in government procurement.

To implement the PSD Strategy, the World Bank is extending adjustment loans, as a “carrot,” for those developing countries willing to remove barriers to foreign investment, such as laws intended to boost local business employment or protect the property of foreign investors. To aid in this process, the Bank launched a major series of “investment climate assessments” in borrowing countries. WTO investment negotiations, if launched after the September 2003 Cancun Ministerial, would have the same objective as the new wave of adjustment lending.