A/HRC/4/10 page 12 B. Privatization 35. Economic reform policy advice from the international financial institutions often includes the privatization of State business undertakings or measures facilitating such privatization. This advice was, in the past, often based on the general assumption that public enterprises and services are inefficient and should, therefore, be privatized in order to improve their performance. However, past privatization operations have shown mixed results. The envisaged productivity increase has not always been achieved and privatization costs have often been higher than expected. Moreover, on a macroeconomic level, it remains unclear if, and to what extent, privatization has contributed to economic growth and poverty reduction. 36. More importantly, the narrow focus on enterprise profitability has often ignored the fact that public enterprises can, and often do, serve important social objectives closely linked to human rights obligations, so that their utility cannot be measured solely by the efficiency or profitability of the enterprises themselves. For while the privatization of such public utilities may, in a narrow economic sense, increase their profitability, it may nevertheless destroy important external social benefits, thereby reducing efficiency in the broader sense. Negative impacts on the poverty and human rights situation that have been observed in such cases include a rise in the price of basic services such as water. In addition, privatization has very often been accompanied by increased unemployment and job insecurity. Unskilled workers and workers belonging to other vulnerable groups have often been the first to lose their jobs and privatization operations have thus contributed to increased inequality.17 37. Privatization decisions should consequently not only be based on broad and sensible economic considerations, but also on a sound analysis of their strategic economic and social functions. Hence, requisite detailed assessment should consider the advantages of different forms of ownership, including public, private and mixed forms, based on each country��s unique set of social, economic, political and cultural circumstances. In the case of basic services, such analysis should always be guided by the objective to best ensure the provision of affordable quality services to all segments of the population. C. Trade reform 38. Trade reforms are, in general, closely linked to multilateral, regional or bilateral trade negotiations or agreements. Their objectives include higher economic growth and increased welfare through cheaper imports combined with growth and diversification of non-traditional exports. 39. Trade reform is usually characterized by the rationalization of import regimes, in particular the elimination of import quotas and the reduction of import tariffs. These measures are supposed to: (a) Allow local producers to access input and investment goods and services at higher quality and lower prices, as cheaper inputs improve the competitiveness of domestic producers; (b) Increase pressure on domestic enterprises to produce more efficiently, as they are less protected from international competition - increased efficiency, in turn, will allow producers to sell their products not only on domestic markets, but also to increase exports;