WTO: 2010 NEWS ITEMS

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The Central African Republic, speaking on behalf of the African Group, said that increasing resources for the initiative has become even more important in the light of the global financial crisis, which has affected many developing countries.

Cameroon, speaking on behalf of the African, Caribbean and Pacific (ACP) countries, supported the African statement, and commended recent efforts by the World Bank and the Inter-American Development Bank to expand Aid for Trade resources. It also stressed the need for a holistic approach of institutions and governments in Aid for Trade.

Dominica, on behalf of the small, vulnerable economies (SVEs), underlined the importance of Aid for Trade in their development programmes.

The Committee on Trade and Development meeting was based on a Secretariat background note “Progress in Implementation of the 2010-2011 Aid-for-Trade Work Programme”, which reported on latest developments in the following areas: resource mobilization, mainstreaming, implementation, monitoring and evaluation, and the private sector.

On resource mobilization, the World Bank reported to the Committee about its new Trade Facilitation Facility with a US$ 40 million trust fund to help developing countries improve their competitiveness and reduce trading costs.

Regarding “mainstreaming”, the chair noted that the WTO Secretariat had conducted earlier in the day a workshop on Aid for Trade and Agriculture. The focus of the workshop was on how trade was being mainstreamed into national and regional policies and donor support for the agriculture sector in developing countries.

The OECD reported on efforts to improve the monitoring and evaluation of Aid for Trade projects. It presented a working paper on “Binding Constraints to Trade Expansion: Aid for Trade Objectives and Diagnostics Tools”.

The next CTD Aid for Trade meeting is scheduled for the last week of May 2010.

Workshop and WTO-ITC event

In the morning of 17 March 2010, the WTO Secretariat organized a workshop on “Aid for Trade and Agriculture”. The objective was to examine the role that Aid for Trade can play in addressing the supply-side and trade-related infrastructure constraints of the agriculture sector. It reaffirmed the key role that the agriculture sector plays in economic growth and poverty reduction and provided a greater understanding of how Aid for Trade works in practice.

The workshop was organized into two sessions. In the first session, scene-setting presentations were made by the Food and Agriculture Organization of the United Nations (FAO), the World Bank, the International Fund for Agricultural Development (IFAD) and the Organisation for Economic Cooperation and Development (OECD). In the second session, members discussed their national and support programmes.

The workshop laid bare the steady decline in agricultural investment which has occurred since the mid-1980s — a decline which has damaged the long-term prospects of the agriculture sector and its ability to generate the productivity increases needed to respond to the challenges of population growth, climate change and physical constraints (land area, water scarcity). The World Bank suggested that agriculture had been considered a “sunset industry” in many developing countries.

FAO, IFAD and OECD all stressed that agriculture was a private sector activity, much of which was conducted in the informal economy, in which small-scale producers predominated. Much government and donor investment had little impact since policymakers had failed to understand the challenge of market integration. New investment approaches based on value chains promised to awaken “dormant high rates of return” available in the sector.

Figures highlighted by the agencies underlined that while official development assistance (ODA), foreign direct investment (FDI) and investment by government from the public budget were needed, the greatest investment gap came from the private sector in developing countries. FAO estimated private current investment at some US$ 140 billion (some 3.5 times higher than government investment and 18 times more than ODA flows). To meet global demand in 2050, FAO estimated that an additional US$ 60 billion was required in private investment. The suggestion was made that getting the business environment right was essential to unlocking private sector investment potential in the agriculture sector. Aid for Trade should play a catalytic role in this regard.

Research by all four organizations highlighted the “special powers” that effective investment in agriculture could have on growth in the rural economy, economic growth and poverty alleviation. A growing body of research was developing which supported the case for pro-poor growth in the agriculture sector. The World Bank highlighted ongoing work it was undertaking to promote responsible investment in agriculture and so allay concerns that inward investment would not lead to a land grab in developing countries.

Also on the same day, the WTO and the International Trade Centre (ITC) held a joint lunchtime event “Connecting West African Farmers to Market”. It was an opportunity to deepen the analysis of issues raised in the morning session and place them in a West African context. It was also a useful follow-on to the Economic Community of West African States (ECOWAS) Review meeting held in late January.

Presentations
> FAO
> World Bank
> IFAD
> OECD

Chair's summary

Programme

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