Assuring gains from trade is essential for the development of developing countries, but how can policy makers be certain that those gains are real and on track? What yardsticks should be set to measure performance and what benchmarks should trade performance try to achieve?

These critical and complex questions are at the heart of trade and development policy at both national and multilateral levels. Assuring development gains from trade is central to realizing a "triple win" for developing countries and countries in transition, for developed countries, and for the world economy as a whole.

In response to these needs, UNCTAD is developing Trade and Development Benchmarks aimed at advancing a systematic understanding of the connections between trade and development. They will help to clearly identify gains from trade and find ways to achieve them, including through trade policies and negotiations. The work on benchmarks will be discussed in the afternoon of Trade Day on 16 June 2004.

The benchmarks are important because improved trade performance can help developing countries to achieve higher levels of growth and investment, strengthen and diversify their economies, and improve efficiency in resource allocation through greater competition. It can also help to raise national living standards, encourage entrepreneurship, and widen economic opportunities for the poor and women. Gains from trade further strengthen developing country contributions to the sustainable development and poverty reduction objectives of the Millennium Declaration.

Identifying benchmarks for gains from trade is a work in progress at UNCTAD, in consultation with relevant parts of the UN system. The goal is to elaborate conceptual and methodological approaches for the further development of benchmarks.

The UNCTAD secretariat presented broad areas for research and analysis on these matters at the Trade and Development Board in October 2003. The United Nations General Assembly took note of this work in December 2003. Initial work on indicators for benchmarks is summarized below.

Possible indicators for benchmarks

1. Developing countries´ performance in trade: How important is trade for economic growth and development in developing countries? What gains does trade yield? How can the positive effects of trade on development be strengthened?
   
      Possible indicators include
   
   
   • Share of developing countries in world trade in goods and services
     
     
   • Trends in export concentration
     
     
   • Trends in terms of trade of developing country exports
     
     
   • Trends in domestic vale added from developing country exports
     
     
   • Trends in developing country share in dynamic sectors of world trade
     
     
2. Openness of markets: The ability of developing countries to fully exploit existing and potential export opportunities depends critically on the openness of markets for their exports.
   
      Possible indicators include
   
   
   • Trends in developing country liberalization
     
     
   • Trends in tariffs (including peaks and escalation) applied to principal exports of developing countries
     
     
   • Indicators of openness in selected services modes and sectors of export interest to developing countries
     
     
   • Incidence of market entry barriers, e.g., discretionary standards, technical and environment requirements, rules of origin, etc
     
     
   • Trends in domestic support and export subsidies
     
     
   • Indicators of anti-competitive structures and practices in key international markets
     
   
   
   
3. Equal opportunity for unequal partners: Equitable rules and their fair application are the ultimate protection of the weaker trading nations. The principle of Special and Differential Treatment under the WTO is meant to factor structural and other asymmetries between the developed and developing countries into trade agreements to make them fair and equitable.
   
      Possible indicators include
   
   
   • Trends in per capita income of developed and developing countries
     
     
   • R&D investment by developed and developing countries
     
     
   • Size of subsidies provided by developed and developing countries
     
     
   • Indicators of infrastructure, technology, human development
     
     
   • Levels of domestic and foreign investment
   
   
   
4. Serving public interest: The Millennium Declaration calls upon the international community to create an environment at national and global levels conducive to development and to the elimination of poverty. To that end, continued efforts must be made to ensure that the trading system is responsive to the key public interest issues, including eradication of poverty, fighting infectious diseases and epidemics and ensuring provision of basic social services to the poor and the underprivileged.
   
      Possible indicators include
   
   
   • Trends in poverty, relevant social indicators
     
     
   • Trends in access to basic social services
     
     
   • Trends in female labour participation in export sectors
     
     
   • Trends in world prices of exports from poverty sensitive sectors
     
     
   • Tariff and quota-free treatment of LDCs exports
     
     
   • Trends in imports of medicine by developing countries without significant pharmaceutical base
   
   
   
5. Revitalizing the commodities sector: About 50 developing countries, including many LDCs, depend on just two or three commodity exports for the majority of their export earnings. Some 39 among them depend on exports of a single commodity. Raising the profile of commodities in the multilateral and wider international trade and development cooperation agenda whilst fostering a supportive international environment for commodity dependent developing countries is critical for the timely achievement of the MDG on poverty reduction.
   
      Possible indicators include
   
   
   • Trends in commodity dependence
     
     
   • Trends in commodity prices and earnings
     
     
   • Trends in domestic processing of commodities in developing countries
     
     
   • Incidence of tariff escalation
     
     
   • Trends in domestic value retention in the value chain
     
     
   • Needs and adequacy of commodity sector assistance
     
     
   
   
   
6. Coherence: Key to the development orientation of the international trading system is the degree of coherence that can be brought to bear among the different areas of trade negotiations and disciplines, between the different multilateral institutions and policies, and between these and regional and national processes and strategies.
   
      Possible indicators include
   
   
   • Special and differential treatment provisions under multilateral trade agreements
     
     
   • Donor conditionalities in bilateral and multilateral development financing
     
     
   • Scope and coverage of WTO Agreements and those of Regional Trade Agreements (WTO plus/WTO minus)
     
     
   • Trade-related financial and technical assistance needs and commitments
     
     
   • Trends in ODA flows, debt relief, and debt service/export ratio