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The Aid for Trade initiative was launched
precisely for this reason. Aid for Trade is essentially about
providing financial and technical assistance to developing countries,
especially the LDCs, to help them build up their supply-side capacity
and strengthen their trade-related infrastructure to enable them to
produce and trade more. Aid for Trade facilitates the mobilization of
international resources to address developing countries’ supply-side
constraints and trade-related bottlenecks. Providing assistance for
capacity-building is one of the indicators that measure progress
towards the achievement of MDG 8, so it is clear that Aid for Trade
has a supportive role to play in the realization of the MDGs.
Aid for Trade has a supportive role to play in the realization of the
MDGs Through the Aid for Trade initiative,
the WTO is playing an important role – in partnership with other
international organizations – in helping developing countries increase
their share of world trade and thereby come closer to fulfilling their
development aspirations. The WTO serves as platform for the actions of
a large number of actors (international organizations, regional
development banks, donors, civil society). It is an example of
partnership at work. The WTO spotlights Aid for Trade through periodic
meetings of its Committee on Trade and Development and through annual
Aid for Trade debates in the WTO’s General Council, as well as through
Global Reviews on Aid for Trade. These events serve to focus on
objectives and measure progress of Aid for Trade.
Commitments on Aid for Trade have increased year-on-year, as shown in
Figure 4 (all figures quoted are in constant 2008 prices). In 2007,
Aid for Trade increased by 20.6 per cent over the baseline period of
2002-05, with commitments reaching almost US$ 31 billion (up from US$
25.7 billion). The increase in Aid for Trade commitments for 2008 was
even more impressive. Preliminary figures illustrate an increase of 35
per cent, to US$ 41.7 billion. The 2008 Aid for Trade flows are 62 per
cent greater than the 2002-05 baseline average.
Figure 4: Aid for Trade increases since 2002-05 baseline period (US$
million)
Source: OECD CRS database The distribution by
region of Aid for Trade flows shows an increase in resources for all
regions relative to the baseline period (see Figure 5). The data for
2008 also indicates that Africa, Asia, Europe and Oceania all
witnessed increases in flows over 2007 while the Americas saw a slight
decline over this period. Although LDCs and low-income countries
continue to receive substantial Aid for Trade, there needs to be a
sustained effort to ensure that these countries continue to benefit
from an increase in Aid for Trade flows.
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The Second Global Review of Aid for Trade,
held at the WTO in July 2009, highlighted that Aid for Trade has taken
root and that WTO members are taking greater ownership of the
initiative, in particular developing countries.
One of the highlights of the Review was showcasing Aid for Trade in
action. The presentation of the North-South Corridor − a joint
initiative of the Common Market for Eastern and Southern Africa, the
East African Community and the Southern African Development Community
− showed what could be achieved when demand and supply, need and
response, and commitment and responsibility unite. This was also true
of the Greater Mekong Sub-Region Economic Cooperation Programme, which
aims to promote development through closer economic linkages in South
East Asia, as well as the Mesoamerican Integration and Development
Project which is also designed to promote regional economic
integration.
The Review reaffirmed the importance of regular reviews for mobilizing
Aid for Trade financing, highlighting the needs of developing
countries and showcasing effective implementation. In his closing
remarks, the WTO Director-General Pascal Lamy reiterated that Aid for
Trade ‘’was coherence in global economic policy-making in action”. The
Review and its outcomes contributed to the development of the Aid for
Trade Work Programme for 2010-11. This Programme consolidates the
progress achieved and maintains momentum on a number of key areas,
including resource mobilization, implementing the initiative
especially through regional cooperation, monitoring and ensuring
greater involvement by the private sector.
It is critical that the level of Aid for Trade flows is sustained in
the future. The impact of the economic crisis on both developed and
developing countries, including increasing pressure on public
finances, reinforces the need for Aid for Trade flows to be sustained
and made more effective in supporting economic growth and alleviating
poverty.
In addition, the Aid for Trade initiative
has led to a marked increase in the efforts of both donors and
recipients to mainstream trade effectively within their development
policies, national development and sectoral strategies, regional
development plans and donor aid strategies. The responses of partner
countries to a joint WTO/OECD questionnaire in 2009 indicates that
developing countries are increasingly aware of the importance of this
and are taking steps in this direction. Donors have also made greater
efforts to align their strategies to the needs and priorities of
partner countries.
The Third Global Review of Aid for Trade will be held in 2011, with a
focus on evaluating the impact of Aid for Trade on economic growth,
trade creation and poverty reduction. Evaluation is a critical
component of the Aid for Trade initiative because it is important to
illustrate, through both evidence-based assessments and anecdotal
feedback, that Aid for Trade is having the necessary impact on
development.
Joint WTO/OECD work on the evaluation of Aid
for Trade is continuing and will be highlighted at the Third Global
Review. This will provide an opportunity for international development
partners and policy makers to assess and evaluate how the initiative
has been working based on case studies and examples of Aid for Trade
“on the ground”.
 Aid
for Trade in action: one of the aims of the Greater Mekong Sub-Region
project is to improve transport links between Thailand and its
neighbours and to promote development through closer economic
linkages.
The Enhanced Integrated Framework helps least-developed countries use
trade as an engine for growth and development
The WTO is a partner in a capacity-building initiative called the
Standards and Trade Development Facility (STDF). This Aid for Trade
initiative was established by the Food and Agriculture Organization of
the United Nations (FAO), the World Organization for Animal Health (OIE),
the World Bank, the World Health Organization (WHO) and the WTO to
help developing countries enhance their expertise and capacity to
analyse and implement international sanitary and phytosanitary (SPS)
standards regarding food safety and animal and plant health measures.
The WTO is also involved as a partner in the Enhanced Integrated
Framework (EIF), which is specifically targeted at LDCs (see Box 3).
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Box 3: The
Enhanced Integrated Framework
The targets in MDG 8 emphasize the need
to cater to the poorest, most disadvantaged and least-developed
countries (LDCs) in the multilateral trading system. LDCs, for
their part, recognize the importance of trade in supporting
economic growth, alleviating poverty and attaining the MDGs.
To use trade as an engine for growth,
LDCs need to strengthen their productive capacity. The Enhanced
Integrated Framework (EIF) is the mechanism assisting LDCs to do
so. Through the EIF partnership, LDCs combine their efforts with
those of EIF donors, EIF core agencies (the International Monetary
Fund, the International Trade Centre, the United Nations
Conference on Trade and Development, the United Nations
Development Programme, the World Bank and the WTO) and other
development partners to respond to their trade development needs
so that they can become full and active beneficiaries of global
economic growth. The EIF assists in prioritizing trade-related
needs into LDC national development strategies, thereby
strengthening donor coordination and dialogue between LDCs and
their development partners. The EIF assists LDCs in accessing the
required funding through the EIF Trust Fund and through leveraging
broader Aid for Trade.
Building on its previous identity as the
“Integrated Framework”, which was launched in 1997, the Enhanced
IF is now fully operational. There are currently 47 LDCs involved
in the EIF process. In April 2010 the donor commitments to the EIF
Trust Fund stood at US$ 182 million while the contributions
received have risen to almost US$ 100 million and are still
growing. A number of projects for funding from the EIF Trust Fund
have been approved and more are in the pipeline.
While some of the trade priorities
identified by the LDCs through the EIF process can be funded
through the EIF Trust Fund, the vast majority of activities need
to be funded by the LDCs’ development partners through initiatives
such as Aid for Trade. The EIF assists LDCs in leveraging Aid for
Trade through its assistance in integrating trade into national
development plans.
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Aid for Trade is having a real impact on the
ability of countries to trade. It is one of the key deliverables of
the WTO in support of the Millennium Development Goals since the
increased emphasis on economic activity and developing effective
infrastructure has clear and positive effects on poverty reduction and
employment in developing countries. Aid for Trade can help promote
export diversification and engender multi-stakeholder participation in
determining trade needs and priorities.
Another novel achievement of Aid for Trade
has been greater recognition accorded to South-South trade and other
forms of cooperation for generating additional funding and
capacity-building for developing countries, especially least-developed
and low-income countries. It is clear that South-South activities are
becoming increasingly important complements to more traditional
donor-funded activities. Together with the conclusion of the Doha
Round, Aid for Trade forms an important engine in realizing the MDGs.
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