AID FOR TRADE

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The Aid-for-Trade Stocktaking Event will explore trade and development issues that have come to the fore during the pandemic. These include how to strengthen digital connectivity, promoting recovery among micro, small and medium-sized enterprises (MSMEs) and adapting trade formalities, such as customs and conformity assessment procedures, to combat COVID-19. The event will also look at the impact of the pandemic on global value chains and regional approaches to economic recovery. The programme can be found here.

Aid-for-Trade is a multi-stakeholder initiative seeking to mobilize resources to address the trade-related needs and supply-side constraints identified by developing countries and least-developed countries. The objective is to help these countries play a more active role in world trade. More information can be found here.

At the meeting, WTO members and international organizations focused on initiatives in response to the pandemic. Russia presented measures to promote trade in medical goods and the roll-out of its COVID-19 vaccine. The Asian Development Bank (ADB) outlined its USD 9 billion Asia Pacific Vaccine Access Facility. The World Bank stated that it is deploying USD 160 billion in financing capacity up to June 2021, with over USD 50 billion from the International Development Association on grant or highly concessional terms. 

In discussing the outlook for economic recovery, the ADB highlighted that while regional merchandise exports were returning to 2019 levels, recovery in tourism is taking longer due to contracting demand from the advanced economies in 2020. According to the World Bank, recovery could be negatively affected by the international spill-over of containment measures (regarding trade, tourism, remittances and financial channels) and pre-existing vulnerabilities (for example, elevated debt levels). The World Bank said that a further 163 million people could fall back into extreme poverty in 2021.

The International Trade Centre said that some 40 per cent of MSMEs are at risk of permanent closure  according to its COVID-19 Business Impact Survey of some 6,000 MSMEs across 130 countries. A presentation on the United Nations Conference on Trade and Development's World Investment Report highlighted how in 2020, foreign direct investment (FDI) flows worldwide have declined by 42 per cent, albeit with significant variation between developed (-69 per cent) and developing countries (-12 per cent) and by region. The presentation also discussed what the reconfiguration of FDI flows might mean for global value chains and developing countries' growth trajectories.

WTO members also updated the Committee on their Aid for Trade activities. The European Union highlighted its Aid for Trade support of USD 13.5 billion in 2018, with 45 per cent of funds going to Africa. The EU added that further funds for COVID-19 recovery could emanate from the ‘Team Europe’ Approach, resources from the EU, Member States, the European Investment Bank and the European Bank for Reconstruction and Development.

China referred to its COVID-19 support to developing countries, and in particular LDCs, and mentioned a new White Paper on “China International Cooperation in a New Era” that marks the 70th anniversary of China's foreign aid programme. China also referred to its preferential market access scheme for LDCs and its renewed contribution to the China LDC and Accession Programme, which seeks to strengthen LDCs' participation in the WTO and assist governments in joining the WTO.

The Standards and Trade Development Facility, a global partnership aiming to facilitate safe trade in developing countries, highlighted the risk of spread of pests and diseases accentuated by the pandemic and the interconnectedness of global supply chains. This reinforced the need to build food safety, animal and plant health capacity to help facilitate safe trade and promote inclusive growth and resilience for developing countries and LDCs. The STDF cited capacity-building initiatives in Guinea, India, Togo and in Southeast Asia to further develop digitalization, including to deliver training to farmers.

The Enhanced Integrated Framework called for cost-effective collaborative efforts to support developing countries in increasing digital capabilities. Under review are e-commerce readiness assessments and strategy formulation, information and communications technology infrastructure development, trade logistics and access to finance and to services payment solutions. The essential role played by the Global Trade Help Desk was highlighted.

LDC graduation and COVID-19

The webinar on LDC graduation and the role of Aid-for-Trade noted that the socio-economic progress of eleven graduating LDCs is being jeopardized by the impact of the crisis. These are: Angola, Bangladesh, Bhutan, Kiribati, Lao PDR, Myanmar, Nepal, Sao Tomé and Principe, Solomon Islands, Timor-Leste and Tuvalu.(1)

Angola's WTO Ambassador, Margarida Rosa Da Silva Izata, noted an urgent need for international support to effectively respond to the crisis. Improving productivity and competitiveness of LDC economies are key priorities, she noted. Other speakers called for renewing engagement with multilateral economic institutions and improving existing multilateral arrangements in trade, finance and the environment.

Graduating LDCs were encouraged to identify graduation-related financing needs to support the implementation of their national plans. The importance of boosting LDCs' agricultural exports, increasing cooperation and capacity-building were touched upon. It was also highlighted that Aid-for-Trade support to build productive capacity and infrastructure is essential to ensure a smooth transition towards LDC graduation and sustained development progress.

More information on the webinar can be found here.

Notes:

  1. There are currently 46 LDCs, of which 11 are on the path to graduation. Six are WTO members: Angola, Bangladesh, Lao PDR, Myanmar, Nepal and Solomon Islands. Three are in the process of WTO accession: Bhutan, Sao Tome and Principe and Timor-Leste. Other two LDCs are Kiribati and Tuvalu. (Vanuatu graduated from the LDC category in December 2020). back to text

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