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10 lessons learned in advising an island nation on trade policy

10 lessons learned in advising an island nation on trade policy

Jean Bertrand Azapmo is a national trade adviser with the Hub and Spokes programme, an innovative aid for trade initiative supporting countries in Africa, the Caribbean and Pacific to boost trade and prosperity.

The programme is supported by the European Union, Commonwealth Secretariat, ACP Group Secretariat and the Organisation internationale de la Francophonie.

In 2008, Jean Bertrand was posted to the Federated States of Micronesia, a sovereign nation in the western Pacific made up of 607 islands. As one of the longest serving experts in the Hub and Spokes programme, he reflects on his time supporting the Department of Resources and Development, and offers his advice for fellow trade advisers and policy-makers:

  1. Understand the trade landscape: As a trade adviser, it’s important to fully understand national trade capacity and priorities: what are the country’s main industries, which are the destination countries for exports, where are your competitive advantages and which markets may source your products or services? Micronesia for example has a negative trade balance with exports (US$40 million) outweighed heavily by imports (US$163 million). The main exports are seafood, fruit and nuts and oil seeds, with its main exports, oil and fuel, electrical machinery, cereals and meat. For a country like Micronesia, trade policy should focus on the private and productive sectors, as core economic drivers. It’s also important to fully understand the dynamics of the political system and how trade policy is made. Here, four quasi-autonomous state governments exist – Kosrae, Pohnpei, Chuuk and Yap – each has its own jurisdiction which affects policymaking processes.

  2. Consider other factors which impact trade: In the domestic economy, issues such as climate and gender can have a major impact on a country’s trade capacity, and vice versa. Trade supports the development of infrastructure to build roads, which allows people to reach hospitals and schools. Trade is also affected by the damaging impacts of climate change, as is the role of women and their ability to work and contribute to the economy. For example, any trade policy framework should take into account Micronesia’s vulnerability to climate change and natural disasters, as experienced during recent typhoons. As a small island developing state, all these non-trade aspects should be taken into consideration during trade policy development.

  3. Listen to those who have a stake in the outcome: During trade policy development, it’s important that all stakeholders are properly consulted and can help shape the outcome. Engagement with business, civil society groups and communities is extremely important. This can be done through a formal consultation process, small focus groups and one–on-one meetings, which will provide first-hand information to inform policy-making. In Micronesia’s case, a National Trade Facilitation Committee was established in 2008 to oversee the development and implementation of the Trade Policy. The NTFC comprises of representatives from government agencies, private sector organisations, the Association of Chambers of Commerce (FSMACC), and NGO representatives.

  4. Align your strategy with national development goals: For countries that do not currently have a national trade policy, the challenge is how to introduce new policies and how to attract support for their implementation among government departments, particularly given limited domestic resources. In Micronesia, one of the lessons we’ve learned is that aligning new development plans with existing strategies can help create synergies and mobilise existing funding pots.

  5. Build relationships and networks: Building relationships with key stakeholders is critical to the implementation of trade policies. This was the case of the National Trade Facilitation Committee in Micronesia, whose primary objective was to oversee the development of the 2011 Trade Policy. The NTFC provided strategic guidance and inputs for the drafting of the policy, facilitated consultations and contributed to the adoption of the final document by Congress. In the end, successful implementation of the trade policy depends not only on the trade ministry but also on the capacity and active role of other ministries and the relationships between implementing agencies. Likewise, in the case of a federal country like Micronesia, success also depends on the capacity of state government agencies.

  6. Work with winners and losers: The outcome of any policy decision will have winners and losers, those that agree with the policy and others that may oppose it. While it is important to work with the winners and encourage them to be champions, policy-makers also need to engage with potential losers, to address their fears. Try to see things from their viewpoint and use this to improve on policy design. It is from our critics that we learn the most. In 2016, a proposed bill to centralise foreign investment did not move ahead until concerns identified by local businesses and state governments who considered themselves as potential losers were adequately addressed.

  7. Identify low hanging fruit for immediate benefits: Actions speak louder than words, so early results should be documented and communicated with all stakeholders, in particular the private sector and law makers. Even the most sceptical stakeholders are likely to change their perception of the trade policy if you can demonstrate its success. So identifying the short, medium and long-term benefits of each policy is often the best strategy. During the development of the 2012 Micronesian Export Strategy, the government prioritised efforts to reduce the country’s trade deficit. It did this by organising trade fairs and targeting producers in the farming industry. This has led to a renewed interest in farming, establishment of producer associations, decline in import of agricultural products, and increase in the production of niche products such as black pepper, coffee, and virgin coconut oil.

  8. Be ready for setbacks and delays: Setbacks are inevitable, whether because of a large work load or limited government capacity to implement a trade policy. The reality is that trade policy development and implementation is very complex and unpredictable, and thus requires flexibility. Delays can often be a source of frustration. While it takes a few months to develop technical documents for an aid for trade project, it might not be approved and implemented until two or three years later. In such instances, we just have to plant seeds, which will eventually bear fruit.

  9. Keep stakeholders engaged and motivated: Law makers and businesses can, understandably, get frustrated with trade policy processes, which can often be slow and time-consuming. So it important to continue to engage, and re-engage. This can be done by convening regular meetings and providing timely updates, communicating through a dedicated website or newsletter to inform stakeholders about latest developments.

  10. Monitor and evaluate: Trade policy issues are complex by nature, given that they cover not just trade issues but also a broad wide range of issues affecting trade (land, human resources development, labour and immigration, lending policies, and laws related to trade). The complexity is even more pronounced in the case of a federal country like Micronesia. For example, land is regulated by each of the four state governments, just like the majority of economic sectors that are essential for business development, such as distribution and professional services. In this context, the existence of a monitoring and tracking system is essential to address capacity constraints and gaps in a timely manner, and to help implementing agencies deliver on time.