Third Global review of Aid for Trade: A snapshot of the outcome

11 October 2011

Aid for Trade (AfT) is about getting trade to work for development. It assists countries and regions to benefit from the opportunities offered by the multilateral trading system in order to generate economic growth and promote poverty alleviation. Providing market access opportunities is a necessary, but not always sufficient condition, for countries to reap the benefits of trade. Action is also needed to help developing countries and in particular Least Developed Countries (LDCs), improve trade-related infrastructure and overcome supply-side constraints. By getting developing countries and their development partners to integrate (or mainstream) trade into development planning frameworks and hence direct aid resource to address these constraints, the AfT Initiative aims to unlock the opportunities offered by trade.

The Third Global Review of Aid for Trade (see box 1), which took place on 18-19 July, aimed to evaluate the six-year-old Initiative's progress in helping developing countries build their trade capacity. It showed that AfT is making a difference. It demonstrated clear positive results in areas such as resource mobilisation, mainstreaming, monitoring and evaluation, South-South cooperation, implementation at both the national and regional levels, and in increasing the role of the private sector. The Third Review also clearly demonstrated that trade liberalisation, buttressed by AfT support and regulatory reform, can stimulate investment, economic growth and poverty alleviation.   

The Third Global Review of Aid for Trade: What concrete outcome?

The Third Global Review provided an opportunity for participants - including Ministers from developed and developing countries, heads of agencies, the private sector and civil society - to recommit politically to the AfT Initiative. The Review supported  the conclusions of the "Aid for Trade at a Glance 2011 " publication according to which the AfT Initiative needs to take steps to better measure and show results, develop indicators, collaborate on monitoring and evaluation, improve the quality of aid, and encourage knowledge sharing. Donors confirmed their continued commitment to AfT, but stressed the importance of showing results, particularly in light of current budgetary pressures. Developing countries highlighted on-going needs and arguments for continuing to provide resources and regional development banks presented overviews of their respective AfT-related work and its impacts on the ground.

It is also clear that addressing other issues, including how AfT can support broader policy objectives such as poverty alleviation, social welfare, food security, gender empowerment, climate change adaptation, energy generation and sustainable development, can lead to the promotion of deeper coherence within the AfT Initiative and with the broader international context.

Gender empowerment, for example, is an issue highlighted in many of the AfT case stories demonstrating that increasing attention is being paid to the fact that empowering women through trade can be a catalyst for achieving gender equality and internationally agreed goals and commitments, including the Millennium Development Goals.  This was further highlighted at the joint International Trade Centre (ITC) and the Canadian International Development Agency (CIDA) session on "Empowering Women, Powering Trade:  Integrating Women into Global Value Chains". At the Review, Walmart and the Inter-American Development Bank launched a new initiative, the "Global Platform for Action on Sourcing from Women Vendors", which aims to increase the share of corporate, government and institutional procurement sourced from women vendors.

The Review confirmed that the mainstreaming of trade into national and regional development policies is making continuous progress. The response of LDCs to the monitoring questionnaire that highlighted that the Enhanced Integrated Framework (EIF) - an AfT partnership for LDCs -  is starting to fulfill its potential was particularly encouraging. LDCs are using the EIF as a concrete tool to help map out trade priorities and mainstream them into national development strategies. Nepal, for example, is currently benefitting from an EIF project on trade-capacity building and addressing specific problems such as trade deficits and rising imports. Cambodia, the Democratic Republic of Congo, and Zambia are also benefitting from the EIF process to mainstream trade into national development plans, improve the management of trade-related technical assistance programmes and provide a framework for leveraging additional resources from donors to support economic diversification.

Several sessions addressed the successes in and the on-going challenge of regional integration, including in the areas of infrastructure (e.g., roads, railways, transport corridors) and capacity building (e.g., trade facilitation, knowledge management).   One highlight of the second day of the Review was the presentation of the African Development Bank's and the WTO's joint paper on "Obstacles and Barriers to Regional Trade Integration in Africa".  That report underlines that although there is political consensus to pursue regional integration, the challenge for Africa is to effectively implement agreed policies and create conditions that will result in deeper market and trade integration and to identify ways to maximize benefits and deliver concrete results.

The Third Global Review was the first with genuine private sector participation and discussions highlighted the benefit of bringing the private sector more into the AfT Initiative as well as the essential role it has to play in ensuring that trade development projects lead to sustainable trade.  Efforts to engage the private sector include the outreach work being done by the World Bank as a complement to the AfT case story exercise through which it is gathering information on what private businesses are doing to make trade happen.  The idea is to develop partnerships to identify and address the constraints that firms are confronted with when making investments in particular activities (e.g. supply chains).   It is clear from the discussions that the private sector sees AfT as going beyond its corporate social responsibility agenda and as being a key part of its investment strategy.

Private voluntary standards also featured in the private sector discussions, particularly regarding the increased barriers to trade that could result from the growing range of standards.

Looking ahead to the Fourth Global Review of Aid for Trade

In his concluding remarks at the Third Global Review, WTO Director General Pascal Lamy, referred to the UN Secretary-General's call to break down the artificial barriers between trade and other areas (e.g., food security, climate change, etc.) to ensure broader coherence with sustainable development.  Deepening coherence will be the central theme of the AfT work programme for 2012-2013 and particular attention will be made to the aid effectiveness agenda, which addresses concerns about effective and timely implementation and measuring impacts of interventions, and the need for a more systematic results-based management and reporting of results.

One of the conclusions of the joint OECD-WTO monitoring exercise is that the delivery of AfT is increasingly guided by the Paris Principles on Aid Effectiveness. Progress was reported in mainstreaming and communicating priorities, country ownership, and donor alignment. On the debit side, however, more can be done to promote results-based management and further actions taken to improve predictability and effectiveness. One immediate way in which these questions will be advanced is at the 4th High level Forum on Aid Effectiveness to be held in Busan, Korea in November 2011. Aid for Trade will be discussed as one of the cross-cutting themes at this meeting.

A new AfT work programme should be developed in time for the WTO Ministerial Conference in December 2011.  Details of the programme will be discussed by Members in the fall.  This new work programme will set out the actions which Members should take in a range of different areas, including: resource mobilisation; leveraging new sources of finance; mainstreaming; engaging the private sector; the Aid Effectiveness Agenda, including better evaluation of impacts; South-South cooperation, particularly in terms of knowledge transfer and skills-sharing; and regional integration.  Work on these topics will provide the inputs for the Fourth Global Review of Aid for Trade planned for 2013.

Author: Deborah Barker is Assistant Aid for Trade Coordinator in the Development Division of the WTO

See Bridges Weekly reporting of the event:  WTO meeting highlights AfT success, though work remains, 20 July 2011, Bridges weekly,  20 July 2011.

1 An in-depth thematic analysis of the case stories is provided in a dedicated chapter included in the joint OECD-WTO publication "Aid for Trade at a Glance 2011:  Showing Results".  See also the article by Frans Lammersen on page 8 of this issue of TNI. Regional analyses - for Africa, Asia/Pacific, and Latin America and the Caribbean - were prepared in collaboration with regional development banks and, in the case of Africa and Asia/Pacific, UN Economic Commissions.  A compendium document providing a brief overview of the over 260 case stories was also prepared jointly by the OECD and the WTO.

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