AID FOR TRADE
“Since 2006, the Aid for Trade initiative has helped mobilize development assistance to support developing countries to build their trade-related infrastructure and grow their supply-side capacity,” Deputy Director-General Xiangchen Zhang said in a statement to the Committee. “By the end of 2020, a total of USD 556 billion had been disbursed to help improve the export performance of developing countries.” DDG Zhang also emphasized that the importance of Aid for Trade for capacity-building in least-developed countries (LDCs) featured in the Outcome Document of the 12th Ministerial Conference held in June.
Referencing one of the key themes discussed at the Eighth Global Review of Aid for Trade held in July, DDG Zhang said: “A message that came through clearly from [the] discussions was the need to move towards models of economic growth and trade grounded in sustainable development.” The debates identified green trade, climate change mitigation, digital connectivity and women's economic empowerment as future Aid for Trade priorities.
Echoing the call issued by Director-General Ngozi Okonjo-Iweala for increased private sector involvement in trade-related development assistance to ensure recovery from the COVID-19 crisis and resilience to future shocks and her suggestion to pivot “Aid for Trade” to “Investment for Trade”, DDG Zhang said: “Aid alone will only take us part of the way towards sustainable development. The next work programme needs to consider the development finance that developing countries and LDCs can tap through a broader development finance lens.”
While members broadly shared the Aid for Trade priorities outlined by DDG Zhang, some delegations urged further consideration of the proposed change in approach to ensure that aid financing was available to the most economically vulnerable members. Another member cited the need for consultation with developing countries in relation to the tracking and reporting of financing flows.
The chair of the Trade and Development Committee, Ambassador Usha Chandnee Dwarka-Canabady (Mauritius), called on members to agree on the next Biennial Work Programme by the end of the year, when the latest Aid-for-Trade Work Programme expires. The Biennial Work Programme forms the basis for activities under the Aid-for-Trade initiative.
Implementing Aid-for-Trade activities
Projects carried out by WTO members
China updated the Committee on its technical assistance and cooperation activities, highlighting that it has distributed close to 2.2 billion doses of COVID-19 vaccines to over 120 countries and organisations. China has been working with 44 LDCs in 2022 on eliminating duties on 98 per cent of their export tariff lines. Members' attention was also drawn to the Fifth South-South Dialogue on LDCs and Development held in May 2022 and to the ongoing China WTO accession internship programme.
The European Union referred to the forthcoming publication of its annual Aid for Trade progress report that will include a special focus on “greening” the EU's Aid for Trade and sustainable food systems. Almost half of EU Aid for Trade targets environmental objectives. Aligning with the “Investment for Trade” concept, the EU also highlighted its recently launched Global Gateway — a strategy for high quality, sustainable infrastructure investments that would mobilise EUR 300 billion up to 2027.
Highlighting its commitment to South-South cooperation, India presented its external development assistance programmes, notably the Indian Technical and Economic Cooperation Programme. India disbursed development assistance finance to 66 countries, including in South Asia and Africa, and is helping developing countries build railways, roads, bridges, border-related infrastructure, transmission lines and power generation, among other things. As the fourth largest destination for LDC exports, India is providing LDCs duty-free market access on over 96 per cent of tariff lines.
Referring to its Trade Policy Review held in June, New Zealand highlighted its 2018 “Trade for All” Programme, which seeks to advance sustainable and inclusive trade through consultations on trade policy development with a wide range of stakeholders. New Zealand is working to advance indigenous trade goals in the region, notably through the Indigenous Peoples Economic and Trade Arrangement. It is also engaged in reforming fossil fuel subsidies, promoting trade and gender issues, and in supporting the participation of LDCs in trade and in fisheries subsidies negotiations.
Reporting on its Trade Policy Review held in May, Switzerland outlined its efforts to support developing countries' integration into the global economy through trade, as part of its new foreign economic strategy. Switzerland is assisting customs administrations in these countries in better complying with international standards and best practices. Other efforts include helping developing countries implement the WTO's Trade Facilitation Agreement, build their officials' capacities in trade negotiations and in trade policy formulation.
The United Kingdom presented its recently launched Developing Countries Trading Scheme, which further simplifies access to the UK market for 65 countries, improving its current generalized system of preferences. This involves further tariff reduction and more simplified rules of origin, among other things.
The United States said it has carried out 500 projects across 180 countries in 2020-2021 through the United States Agency for International Development USAID, focusing on lower middle-income Sub-Saharan African countries. In 2022, the US will renew its voluntary contribution to the WTO Global Trust Fund, emphasizing the importance of targeting technical assistance activities towards implementing good regulatory practices and improving members' notifications. The US stressed the essential role that transparency plays in the implementation of WTO agreements.
Projects by international organizations
The Asian Development Bank (ADB) noted that the region’s economy is expected to grow by 4.3 per cent in 2022, down from the April projection of 5.2 per cent. The ADB’s Trade Finance Gaps, Growth and Jobs 2021 survey estimated a USD 1.7 trillion gap in trade finance, which is limiting the ability of companies — especially SMEs and women led businesses — to fully participate in global trade.
The African Development Bank underlined the funding it is providing to build the resilience of African food systems, particularly under the African Continental Free Trade Area. To mitigate the impact of the Russia-Ukraine conflict, USD 1 billion had been mobilized through the Emergency Food Production Programme Facility to provide 20 million African smallholder farmers with certified seeds, increase access to agricultural fertilizers and enable them to rapidly produce 38 million tons of food.
The European Bank for Reconstruction and Development (EBRD) is working with small and medium-sized enterprises (SMEs) to support the resilience of global trade and promote sustainable growth in 37 countries in emerging Europe, Central Asia and Southern and Eastern Mediterranean. In 2021, the EBRD provided USD 40 million in direct financing and USD 800 million in trade finance with private companies in agri-business and food value chains. In 2022, the EBRD scaled-up financing to the Ukraine private sector.
The Inter-American Development Bank (IDB) mentioned its commitment to align work with the goals of the Paris Agreement and to provide USD 24 billion in climate and green finance between 2022 and 2025 for its Latin American and Caribbean member countries. Underscoring the strong link between trade and climate change, the IDB explained how it is analysing what policies could help reduce greenhouse gas emissions, and fostering regional cooperation to advance sustainable and resilient intra-regional trade.
Citing climate change as one of the many challenges that LDCs are facing, the Enhanced Integrated Framework stressed that Aid-for-Trade investments to mitigate climate change can be a win-win for all stakeholders. As LDCs often lack the technical capacity to use the available funding, the EIF is supporting LDC governments in better appreciating the link between trade and the environment.
The Standards and Trade Development Facility (STDF) said it has leveraged USD 37 million in resources from various sources, including the private sector. Projects carried out by the STDF include facilitating horticulture exports in Mozambique and South Africa and developing e-phyto certificates in Madagascar. The STDF is also working on developing digital solutions to improve standards and food safety in developing countries and LDCs.
The United Nations Industrial Development Organization (UNIDO) gave a rundown of its activities to promote industrialization in Africa, notably through the launch of global green hydrogen initiatives, and highlighted the importance of investing in technology and infrastructure on the continent. In November, UNIDO will participate in the United Nations Sharm el-Sheikh Climate Change Conference and in Africa’s Summit on Industrialization and Economic Diversification to take place in Niamey, Niger.
The International Trade Centre (ITC) outlined its efforts to help small businesses build inclusive, sustainable and prosperous economies. ITC is supporting 1,000 women coffee growers in Rwanda to benefit from digital traceability solutions and has helped achieve USD 45 million in sales through its SheTrades Commonwealth project. ITC is also working to help micro, small and medium-sized enterprises across Africa use digital technology.
Workshop on Aid for Trade
The workshop on “Maximizing the economic diversification impact of Aid for Trade” explored how the Aid for Trade initiative can act as a catalyst for private financing and help developing countries' achieve export diversification goals. The importance of women's economic empowerment and climate transition goals was highlighted.
Drawing on experiences from members and partner organizations, speakers noted that Aid for Trade can facilitate export diversification by creating an enabling environment and helping developing countries connect local value chains to international markets. The workshop heard presentations from the Organisation for Economic Co-operation and Development (OECD), the World Bank, the EIF, USAID, and 2X Collaborative — a global industry body that promotes gender-related investing — and various WTO members.
Copies of all presentations and a recording of the workshop can be found here.
The WTO-led Aid for Trade Initiative encourages developing country governments and donors to recognize the role that trade can play in meeting countries' development objectives. The initiative also encourages action to address the trade-related constraints identified by developing and least-developed countries (LDCs). Find out more about the Aid for Trade initiative here.