Latin America and the Caribbean High Level Aid for Trade Meeting

> Pascal Lamy’s speeches

Let me start by thanking the Government of Jamaica, and Prime Minister Golding, for hosting this Second Regional Review of Aid for Trade for Latin America and the Caribbean.

I would also like to thank President Moreno and his team at the Inter-American Development Bank — our partners in this event — for the considerable efforts they have made to make this regional review possible.

I also wish to acknowledge the presence of other heads of government, ministers and other high-level representatives from national, regional and multilateral organizations, and thank them for joining us in this regional exercise.

Two years ago, we gathered in Lima, Peru for the First Latin American and Caribbean Regional Review of Aid for Trade. Strengthening competitiveness and “connecting” more effectively with global markets were the common aspirations of the countries in the region, most of which are highly trade-dependent.

In Lima, I was impressed by the importance countries in the region give to trade, investment and global integration as a means of creating new opportunities for growth, and poverty reduction. Key priorities for the future were identified at this first LAC review, including, for example, the need for national and regional trade-related infrastructure, expanding the scope of initiatives on trade finance, strengthening trade facilitation, increasing private-sector capacity, and promoting export diversification. Our meeting over the next two days will provide us with the opportunity to assess progress in these areas since then.

At the First Global Aid for Trade Review held in Geneva in 2007, we agreed on a benchmark for measuring progress. We agreed to take the 2002-2005 average, identified by the OECD, as a starting point so as to have a better global picture of Aid for Trade flows. This would allow us to identify whether additional resources were in fact being delivered, where gaps existed, and to highlight where improvements could be made to increase transparency on pledges and disbursements. By 2007, total Aid for Trade flows had increased by about 20 per cent from this benchmark. Both our hope and endeavour are that, despite the economic crisis, the Aid for Trade flows should continue this upward trend.

But we have to move from this macro-level monitoring to more national, regional, and sub-regional level assessments of aid flows. It is for this reason that national, sub-regional and regional reviews are an essential part of the Aid for Trade monitoring process, and the Inter-American Development Bank has been doing exemplary work in this regard.

A National Aid for Trade Review was held in Peru on 3 March 2009 where discussions focused on the global economic integration strategy of Peru, with its associated challenges and opportunities. This meeting is an excellent example of how we can move from commitment to implementation. A national Aid for Trade review structured along the same lines was held in Honduras at the beginning of this week and I look forward to receiving a full report on the outcome.

The current economic crisis is, of course, of major concern to us all. Trade is also a casualty of this crisis. Our forecast shows that world trade will contract by 9 per cent this year. Both the World Bank and OECD estimate that world economic growth will decline this year by close to 3 per cent. Foreign direct investment, revenues from tourism, and remittances are also dropping, as are commodity prices. All these, I know, are of serious concern to your region.

The WTO has started monitoring trade-related measures taken by our members during this crisis, as a means to provide transparency and, through peer pressure, pre-empt the threat posed by a shift towards protectionism. One country's imports are another country's exports. And we know that protectionism would lead to retaliation, further stalling trade as an engine of growth. It is therefore important that we work to keep trade open.

The current crisis is having a disproportionate impact on the most vulnerable countries. It is therefore welcome that G20 leaders recently undertook to mitigate the impact of this fallout by ensuring liquidity in the world economy, and also standing by their ODA pledges, including on Aid for Trade. In addition, they pledged to boost trade finance by making available $250 billion over the next two years through different channels. In the Latin American and Caribbean region, I commend the efforts made by President Moreno to tackle the trade finance crisis by boosting the IADB's Trade Finance Facilitation Programme (TFFP) from $400 million to a maximum of $1 billion. Trade finance is the oil that keeps the wheels of trade turning, so it is essential to ensure it does not dry up!

But we also need to work to keep on opening trade. Seven years have passed since we launched the Doha Round negotiations and much progress has been achieved in building consensus on the different topics on the agenda.

Given the importance of trade for this region, it is no surprise that many initiatives in these talks emanated from here. Caribbean countries have been instrumental in ensuring that the specificities of small and vulnerable economies are recognised not only in the negotiations but in the wider work of the WTO. You have your special place in the WTO house!

Countries in Central and Latin America have been advocates of greater trade opening for tropical products. Many countries in this region were founding members of the G-20, whose agriculture proposals helped build bridges during the negotiations. In sum, there is a trade activist crowd in this part of the world!

It is therefore in times of crisis, such as now, that completing the negotiations under the Doha Development Round becomes more necessary. The Doha Round is our lowest hanging global stimulus package. Not only because of the new market opportunities that it will create in goods and services, but also because it will provide a stronger insurance policy against protectionism. We must, therefore, go the last mile to the finish line.

The key objective at this juncture is to keep trade open, keep opening trade and make trade flow.

During the next two days, we will also be discussing the promotion of specific private sector strategies, coordination amongst donors, and South-South cooperation in the context of Aid for Trade. This is an opportunity to see where progress has been made, to share good practices, and to better prepare for the challenges ahead.

For the Latin American and Caribbean region as a whole, Aid for Trade has followed an upward path, growing by 34 per cent, from $1.6 billion in 2002-2005 to $2.2 billion in 2007. An interesting feature in the Latin American and Caribbean region is the development of South-South cooperation as well as triangular cooperation.

I acknowledge, and strongly support, efforts made by Argentina, Brazil, Chile and Mexico in providing extensive technical assistance and capacity- building support in the region.

But challenges remain — both between your countries and within them. For example, a majority of countries in this region are dependent on a narrow range of export products and a narrow range of export markets, thereby increasing your vulnerabilities to external shocks. The challenge therefore is to diversify your export base and also to enhance trade flows within the region. We have to address these challenges and build a targeted and more focused approach to Aid for Trade in the region.

While the importance of additional, predictable, sustainable and effective funding cannot be over-emphasized, the issue of aid effectiveness is equally important and should not be ignored. A big challenge that the development community faces in relation to Aid for Trade is to demonstrate its effectiveness. More robust research is needed on the impact and effectiveness of Aid-for-Trade programmes through better monitoring and evaluation.

On our part, we are, with the help of the OECD, monitoring Aid for Trade at four levels:

  • At the global level, an analysis of Aid for Trade flows is under way to assess where resources are being delivered, to identify where gaps lie, to highlight where improvements should be made, and to increase transparency on pledges and disbursements;

  • At the national, regional and multilateral levels to assess donors' Aid for Trade activities, based on donors' self-assessments, to ensure the dissemination of best practices across countries, to identify areas for improvement, and to increase transparency on pledges and commitments;

  • At the country level, based on recipient self-assessments, to provide a more focused, country-specific perspective on whether trade is being mainstreamed into national development policy, whether trade needs are being met, and financial resources are being provided, and whether Aid for Trade is effective on the ground; and

  • Through the use of indicators to track the use and effectiveness of Aid for Trade, in particular against priority areas identified by recipients in their self-assessment questionnaires.

As part of this monitoring and evaluation exercise, a questionnaire was jointly sent out by the OECD/WTO to assess national Aid for Trade policies. The response to this questionnaire has been very encouraging and we will use this information to prepare fact sheets for each country that has replied.

We hope the fact sheets will serve as an initial and useful tool to stimulate an objective national dialogue between stakeholders on how to bring about more and better Aid for Trade and how to bridge the gap between demand and response.

This Regional Review will help us find concrete solutions to these challenges. Cooperation, coordination and coherence are key issues in implementing Aid for Trade projects. We need to think in terms of partnerships.

As I have noted earlier, the Second Global Aid for Trade Review will be held at the WTO in Geneva on 6 and 7 July 2009. The Review will evaluate progress made since the First Review in 2007 and scrutinize how Aid for Trade is being operationalized on the ground. Progress in securing additional financing will be discussed and views exchanged on how aid flows can be maintained against this backdrop of a worsening global economic outlook.

We will, of course, feed the results of the Latin American and Caribbean Review into the debate, and I hope we will be able to share with other participants concrete results of this two-day meeting.

In conclusion, let me just leave you with the following key messages:

  • We need to work together to keep trade open by resisting protectionism.

  • We also need to keep opening trade by rapidly concluding the Doha Round.

  • We need to ensure Aid for Trade promises are kept, despite the crisis. In fact, Aid for Trade will help developing countries prepare for after the crisis. By building their productive capacity, they will unlock their growth potential and this will help them take advantage of existing and new trade opportunities.

  • We need to keep fostering South-South cooperation on Aid for Trade.

This high-level meeting should provide a strong impetus to move from commitment to action in the Latin American and Caribbean countries. Let’s seize this opportunity to work together to effectively use trade as an engine for economic growth in the region and as leverage for poverty reduction.

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