Aid for Trade needs a fresh look
wasi ahmed |
April 19, 2022 9:09:21 PM
Since the launch of the Aid for Trade program in 2005 by the World Trade Organization (WTO) at the Hong Kong Ministerial Meeting, it was expected that the targeted initiative to improve the trade capacity building of developing and least developed countries not only address areas requiring international support, but also facilitate the creation of a level playing field between trading partners – large and small. Aid for Trade is a WTO initiative as well as a political concept of international economic and trade development, aimed at helping developing countries, and in particular the least developed countries, to build their capacities and infrastructures. commercial. The overall objective is to bring greater coherence to existing trade support programs and to generate additional funds to help developing countries build their supply capacities and trade-related skills, so that they adapt to the post-Doha trade environment. It also aims to help countries develop and implement trade strategies, plans or projects, such as building roads, ports and telecommunications linking domestic and global markets, or investing in industries. and sectors to help diversify exports.
Aid for Trade is seen as the main multi-agency mechanism to address the institutional and supply-side constraints that prevent developing countries from participating more fully in the international trading system. As such, it has become a key component of international official development assistance (ODA). More importantly, in the absence of any meaningful initiative from UNCTAD – the United Nations agency which for decades has looked after the interests of poor and less developed countries in many forms of trade promotion, the program launched by the WTO looked like a major attempt to bridge the gap caused by the gradual transition of UNCTAD as a direct trade facilitator following the emergence of the WTO. In fact, it was UNCTAD that had highlighted the need for an integrated approach to aid and trade in support of sustainable development gains, particularly for least developed countries (LDCs).
But how far have things gone in the past decade and a half? Over the years there have been a number of progress reviews. The next review will take place July 27-29, with the theme “Enhancing Connected and Sustainable Commerce.” According to the WTO Secretariat, the review, which will take place both in person at WTO headquarters and virtually, will highlight areas where developing and least-developed countries (LDCs) have need help to overcome supply-side constraints that limit their participation. in international trade. The event will be opened by Director General Ngozi Okonjo-Iweala.
Interestingly, in the upcoming review, Aid for Trade is included in Sustainable Development Goal 8 on “decent work and economic growth”, which is one of the 17 development goals United Nations General Assembly in 2015. Goal 8.a aims to “increase Aid for Trade support to developing countries, in particular least developed countries, including through Enhanced Integrated Framework for Trade-Related Technical Assistance to Least Developed Countries”.
From previous reviews, it was learned that in 2017 there was a jump in donor commitments. In 2018, donor commitments remained stable at $58 billion, based on current prices. South and Central Asia received the highest share (31.4%), followed by Sub-Saharan Africa (29.2%). Lower middle income countries received 37.5% of aid for trade, followed by least developed countries (36.8%). There are, however, criticisms as to whether funds were released after careful consideration of areas needing assistance by recipients, and whether attention was given to equitable distribution. In addition, there is the question of whether funding for Aid for Trade has overlapped with development findings – not directly related to trade as such.
In the meantime, the OECD and the WTO have established an “Aid for Trade Monitoring Framework” to track progress in the implementation of the Aid for Trade initiative. It consists of the following elements:
• trade integration and prioritization (request)
• trade-related projects and programs (response)
• improved ability to trade (outcome)
• improved trade performance and poverty reduction (impact)
It is expected that the upcoming review will provide donors and recipient countries with an opportunity to examine whether Aid for Trade and its related programs are helping developing countries, in particular LDCs, to overcome constraints in commercial and production capacity.
Years ago, recipient countries were asked to rate the success of Aid for Trade in their own country against twelve broad criteria. The results showed that there was consensus among countries that the program should include more resources, support export diversification, raise the profile of trade in development strategy, reduce poverty and promote growth. economic.
Over the years, it is believed that there has not been much change in the overall perception. Therefore, to bring about the desired results, the program should aim to achieve its objective in a more precise way and should include: a better understanding of trade, an increased profile of trade in the development strategy (mainstreaming), aid for trade more harmonized and aligned projects and programs, increased Aid for Trade resources, increased and diversified exports, increased economic growth, poverty reduction, greater environmental sustainability, greater gender equality.
In this context, it is often claimed that much of the agenda has been a repackaging of existing trade-related aid flows. This has worrying implications for the future of the regime and for the developmental impact of aid for trade. The review is expected to also take stock of the Covid shocks experienced by less advanced countries in their trade and commerce sector.