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    Advocacy for "Aid for Trade"

     

     
     
    International Trade Forum - Issue 4/2006, © International Trade Centre

    © WTO "Aid for Trade is about investing in developing countries so they can use trade as an engine for growth, development and poverty reduction."

    Aid for Trade has become an important element of the World Trade Organization's work in the past year, a job that requires it to take on an advocacy and coordination role.

    The heart of the Doha Development Agenda is a "trade and growth" agenda that is of central importance to helping developing countries, and especially the least developed countries (LDCs), to reach their Millennium Development Goals.

    "Aid for Trade" is about investing in developing countries so they can use trade as an engine for growth, development and poverty reduction. It aims to help them build the supply-side capacity and trade-related infrastructure that they need to be able to implement and benefit from WTO Agreements, and more broadly, to expand their trade.

    In the past 12 months, Aid for Trade has become an important political and economic complement to the negotiations, one that can contribute greatly to unlocking the full growth potential of a successful Doha round.

    A factor that is complicating the conclusion of the trade negotiations themselves 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 liberalization 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.

    Integral to the Doha agenda

    That is why Aid for Trade is essential to support the conclusion of the Doha negotiations, and why trade ministers took the initiative in Hong Kong to mandate me, together with a Task Force of member governments, to produce recommendations to raise additional financial resources that can make the Aid for Trade initiative operational.

    Aid for Trade will continue to move forward despite the temporary suspension of negotiations. We consider a comprehensive Aid for Trade package as both necessary in itself and an essential part of a successful round.

    WTO's role in Aid for Trade is predominantly one of advocacy for additional resources and of enhancing coordination at the multilateral level and, in the case of beneficiary countries, at the domestic level. No direct development assistance role is foreseen for the WTO.

    This means advocacy, on the one hand, with trade and finance ministers and their officials to encourage them to raise the domestic profile of the trade and growth agenda, ensure that it is incorporated in national development programmes and use ODA (official development assistance) best practices when presenting trade-related needs for international support.

    It also means advocacy with finance and development ministers and officials to encourage them to provide well-coordinated, generous responses to trade projects, commensurate with the needs of developing countries and LDCs.

    Test for success: Better trade capacity

    In our view, the test for our collective success in aiding trade should not be limited to mainstreaming trade in national development plans, but to increased capacity of developing countries to translate the opportunities from market opening into increased trade flows of goods and services.

    ITC has a tried and tested role here. Its work with the private sector is crucial in making the Doha round a beneficial one for developing countries, by preparing business to compete internationally.

    Strengthening partnerships

    I am convinced that there is a strong and broad commitment to increasing Aid for Trade in the context of a projected increase in ODA. We are working 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 World Bank, the International Monetary Fund and the regional development banks.

    There is a broad agreement that we cannot continue to do Aid for Trade in the same way we have done in the past. This initiative is not about replacing or duplicating existing mechanisms, but about making them work more effectively, with measurable results, in a focused manner. We are working with the Organisation for Economic Co-operation and Development on possible ways to improve the effectiveness of Aid for Trade, in particular through our joint database on trade-related technical and development assistance.

    A wide range of priorities needs to be met to promote regional and global integration and to realize the developmental potential of trade opening. Meeting these needs can only be determined by countries themselves, working with national stakeholders, particularly the private sector, and with their development partners. Ownership should not just be a buzzword. It is a precondition for making Aid for Trade effective (see Aid for Trade: We Can Do Better).

    The WTO Secretariat has already started reflecting on how to utilize its own internal mechanisms to monitor Aid for Trade.

    We must move forward on Aid for Trade, building on the momentum that clearly exists despite the current setback in the negotiations. Increasing Aid for Trade is not contingent on the outcome of the Doha round, but its value will be greatly increased if it is in conjunction with substantial new market access opportunities and new rules to facilitate trade.