18 September 2006

WTO to press for additional aid-for-trade resources

As WTO members prepare to discuss a task force’s recommendations in mid-October, WTO Director-General Pascal Lamy has stressed the importance of “aid for trade” for helping developing and least-developed countries deal with adjustment costs, capacity constraints and supply responses for new trade agreements. But he told the World Bank-IMF’s Development Committee on 18 September 2006 that the WTO’s role would be advocacy and not the provision of assistance. This is what he said:

The heart of the Doha Development Agenda is a “trade and growth” agenda that is of central importance to helping developing countries and LDCs to reach their Millennium Development Goals.

The multilateral trade negotiations are of course at the core of the DDA. They are widely accepted to offer a major opportunity to reinforce and broaden medium-term growth prospects worldwide.

In the past twelve months, Aid for Trade has become an important political and economic complement to the negotiations, that can contribute greatly to unlocking the full growth potential of a successful Doha Round.

Last July, as you know, together with members, I decided to suspend the trade negotiations to allow a period of “time-out” for Ministers to consider how they can each contribute to breaking down the remaining obstacles to substantial liberalisation of trade, particularly in agriculture. I know that a serious political reflection has been taking place in capitals since then. I am convinced that the result of this process will be an acknowledgement that there is no acceptable alternative to the successful conclusion of the Round.

The real questions, then, are “how” and “when” we can conclude the trade negotiations. The right answers, I believe, are “ambitiously” and “soon”. We are close to moving the trade and growth agenda a big step forward, and that is an opportunity that we cannot afford to miss.

A factor that is complicating the conclusion of the negotiations is the evolving public response to globalization in many parts of the world. Today it is not only global income growth that matters, it is also who shares in that growth and how. Politically, we cannot leave the question of “who gains what?” from trade liberalisation up to market forces only.

We have to address concerns about adjustment costs, capacity constraints and supply responses in developing countries and LDCs. Where those cannot be taken care of with national resources or by the private sector alone, we must try to build an effective international response.

That is why Aid for Trade has such an important role to play in support of the conclusion of the Doha negotiations, and why WTO Ministers took the initiative in Hong Kong to mandate me and a Task Force of member governments to produce recommendations on raising additional financial resources for Aid for Trade and making the Aid for Trade initiative operational.

I am working closely with Paul Wolfowitz, Rodrigo de Rato and your regional development financial institutions on Aid for Trade, and will continue to do so as the implementation stage gains momentum under your leadership. Aid for Trade is not part of the WTO single undertaking and will continue to move forward despite this temporary suspension of negotiations. We consider a comprehensive Aid for Trade package as necessary in itself and a necessary part a successful Round.

The WTO's role in Aid for Trade is predominantly one of advocacy for additional resources and enhanced coordination both at the multilateral level and at the domestic level in the case of beneficiary countries.

Advocacy, on the one hand, with trade and finance Ministers and their officials, to encourage them to raise the profile of the trade and growth agenda at the domestic level, to ensure it is appropriately incorporated in their national development programmes, and use ODA best practices when presenting their trade-related needs for international support.

And, on the other hand, advocacy also with finance and development Ministers and officials, to encourage them to provide a well-coordinated and generous response to requests for additional development assistance for trade projects and programmes that is commensurate with the needs of developing countries and LDCs, particularly once the results of the Doha Round start to be implemented.

WTO Members will discuss the recommendations of the Aid for Trade Task Force in mid-October. I expect their consideration of any institutional role for the WTO on Aid for Trade to focus on monitoring, using our Trade Policy Review process for example. No direct development assistance role is foreseen for the WTO.

I also wish to note the success we have collectively achieved in revamping the Integrated Framework for LDCs which we consider an important milestone in our coherence and cooperation efforts. Work is underway to operationalise the revamped IF with an executive secretariat that will better coordinate the implementation process and also support efforts to enhance the capacity of LDCs to benefit from the IF.

In our view, the test for our collective success in bringing more and better A4T should not be limited to trade mainstreaming in national development plans only but to the increased capacity of LDCs and developing countries to translate the trade opportunities that trade opening will provide into increased trade flows of goods and services. This is the foundation of any successful integration in the multilateral trade system.

We shall work closely with established mechanisms — at the bilateral, regional and multilateral levels — to help us make the Aid for Trade initiative operational and successful. I know I can continue to count on the support of my colleagues in the Bank, the Fund and the regional development banks to do that. I am seeking also the support of you, Ministers, in this Committee, to help bring the WTO's trade and growth agenda to a successful conclusion.