EU-Project: Trade and Private Sector Development (TPSD) „Aid for Trade“ Achim Seiler, Trade Consultant and Capacity Building Specialist, Kathmandu EU-Project: Trade and Private Sector Development (TPSD) TPSD is implemented by in cooperation with and

Table of contents Aid for Trade: Background Aid for Trade - Initiative Donor Background Objectives for Aid for Trade Categories for Aid for Trade Implementation of Aid for Trade Some expectations... ...and figures Lessons for Aid for Trade programming The way ahead

Aid for Trade: background Two developing country concerns: perceived limited benefits from improved market access alone, without sufficient supply-side support Need for compensation for adjustment costs associated with multilateral and regional trade liberalization, notably preference erosion, support for net food importers and reduced trade related fiscal revenue

Aid for Trade-Initiative In response to these concerns, the WTO Ministerial Meeting in Hong Kong in December 2005 called on donors to increase Aid for Trade resources to help developing countries (especially LDCs), build the supply-side capacity and trade-related infrastructure that they need to assist them to implement and benefit from WTO Agreements and more broadly to expand their trade.

Donor Background Donors had already agreed to a substantial increase in the overall amount of resources available to trade-related assistance (in large part under the G8 Gleneagles Agreement and the UN Millenium Goals). This led to a number of multilateral and bilateral development agencies committing substantial funds under the Aid for Trade topic.

Objectives for Aid for Trade Enable developing countries, particularly least-developed countries (LDCs) to use trade more effectively to promote growth, development and poverty reduction, and to achieve their development objectives, including the Millenium Development Goals (MDGs) Help developing countries, particularly LDCs, to build supply-side capacity and trade-related infrastructure in order to facilitate their access to markets and to export more Help facilitate, implement and adjust to trade reform and liberalisation Assist regional integration Assist smooth integration into the world trading system Assist in the implementation of trade agreements WTO Task Force on Aid for Trade

Categories for Aid for Trade Trade policy and regulations – to build local capacities to develop national trade policies, participate in trade negotiations and implement trade agreements Trade development – to help enterprises trade and create a favorable business environment Trade-related infrastructure – to assist countries in building the physical means to produce and move goods and export them (e.g. Transport, storage, communications and energy) Building productive capacity – to support sectors such as agriculture, manufacturing or services for export development and to improve export competitiveness Trade-related adjustment – to support beneficiary governments to adjust to changes in both national and other countries´trade policy measures WTO Task Force on Aid for Trade

Implementation of Aid For Trade Aid for Trade is part of Overall development Assistance (ODA) – grants and concessional loans – tageted at trade-related programmes and projects Aid for Trade can be a valuable complement to the Doha Development Agenda, but it cannot be a substitute for the development benefits that results from a successful conclusion of the Doha round Monitoring will take place at three levels - global monitoring, carried out by the OECD - donor monitoring in the form of self-evaluations - in-country monitoring, also in the form of self- evalations

Implementation of Aid for Trade Most Aid for Trade is disbursed bilaterally by donors or through multilateral and regional finance and development organisations, such as the World Bank and regional development banks The WTO participates in the disbursement of a very small share of Aid for Trade in categories (a) and (b), through the DDA Trust Fund, The Integrated Framework, JITAP, STDF, and ITC

Some expectations... The OECD found that one dollar in Aid for Trade generates eight dollars in extra trade for all developing countries and 20 dollars for low income countries A 1% decrease in global trade costs would increase global income by US$ 40 billion at a minimum with close two-thirds of this amount accruing to developing countries, according to OECD calculations

....and figures Since the start of the initiative, 10 years ago, donors have disbursed US$ 264.5 billion in financing Aid for Trade programmes, with annual commitments now standing at US$ 55 billion. A further 190 billion in other official trade-related flows have been disbursed, while South-South trade-related support is also helping developing countries reduce high trade costs.

Lessons for Aid for Trade programming Importance of policy linkages and policy coherence for trade expansion and poverty reduction Base Aid for Trade programme design on disaggregated ex-ante analysis Support the integration of producers into global supply chains and support the transparency of these supply chains Importance to improve productive capacity Incorporate stakeholder engagement, including typically poorer or excluded social and economic groups

Lessons for Aid for Trade programming Ensure a degree of flexibility and responsiveness to build country-level ownership Identify and work with ´champions´ to deliver and sustain Aid for Trade programmes Government and donor coordination supports success Support efforts to monitor the trade and poverty impact of Aid for Trade programs Source: DFID

The way ahead Governments, in dialogue with stakeholders, must now work to identify the most distorting trade costs, how best to reduce them, and how to use effectively the different development finance instruments offered by a wide range of providers. Reducing trade costs is an agenda where the private sector has much to offer and the development community much to learn. It is an agenda that will maximise the contribution of trade to delivering the sustainable development outcomes that are envisaged in the emerging Sustainable Development Goals. (WTO: Aid for Trade at a Glance 2015)

Seiler.achim@yahoo.de