Aid for Trade - (What) can it deliver for development?

UK TDP project workshop

Aid for Trade - (What) can it deliver for development?

June 5th 2008, London

Background on Aid for Trade - During the Doha Round of WTO negotiations developing countries have increasingly argued that the range of trade and production constraints they face (e.g. weak transport infrastructure, low technology levels, weak financial sectors etc) limit the benefits they can gain from engagement with the WTO. At the Hong Kong WTO ministerial in December 2005 developing countries therefore demanded that developed countries provide them with increasing volumes of trade related assistance (dubbed Aid for Trade) to help them to build their capcity to trade and take advantage of trade opportunities provided by the Doha Round. Since then the WTO and others have been leading efforts to put this agenda into action.

Background on workshop - This workshop brought together representatives from the UK government, UK and European NGOs, research institutes, international institutions such as UNIDO, ITC and OECD and CUTS’ partners from Kenya, Nepal and Uganda to discuss developments related to the WTO Aid for Trade initiative and identify critical issues for action.

Session 1 - Does Aid for Trade require us to rethink our current approach to aid (social vs economic sector priorities)?

In this session CUTS’ partners from Kenya and Uganda gave vivid country illustrations of the supply-side constraints they face, especially in agriculture; and Susan Prowse from DFID highlighted how developing institutions to better manage Aid for Trade and private flows, was absolutely vital, as was ensuring that a global trade deal can be agreed.

Discussions focussed on whether / the extent to which agriculture should be prioritised in AfT when the poor need to move out of agriculture; the danger of donor fads coming and going; the challenge of increasing AfT in the context of limited aid increases; and the importance of situating the AfT discussion within the context of an inequitable trading system, whose rules work against the poorest countries.

Presentations:

"Trade and Poverty", Susan Prowse, DFID

Session 2 - What models are we following for promoting production and trade development in the poorest countries?

In this session CUTS’ partner from Nepal highlighted how donors still often impose on country ownership and how Nepal is eager to maintain policy space to develop strategic sectors; ITC highlighted the importance of donors identifying their comparative advantage and the indivisibility of country ownership; and UNIDO highlighted the importance of industrialisation and the fact that donors seem to be giving this issue more attention, as noted by the increased funds they are attracting.

Discussions focussed on whether globally increases in spending on industrialisation are that large, the importance of targeting private sector spending well, how donors can better promote country ownership and the challenge of bilaterals finding their comparative advantage.

Presentations:

"Models to promote trade devleopment in Nepal; Role of trade related aid", Ratnakar Adhikari, SAWTEE

"UNIDO trade capacity building model for promoting production and trade development", Lalith Goonatilake, UNIDO

Session 3 - Has there been any progress in up-scaling Aid for Trade? - the challenge of defining and monitoring Aid for Trade flows

In the third session on “measuring AfT flows” OECD highlighted the challenges with monitoring AfT flows and the importance of putting emphasis on effectiveness; and ODI presented on the importance of Aid for Trade (specific deliverables of the WTO process) being differentiated from aid for trade (general and traditional trade related assistance) and how we can better measure the impact of AfT.

Discussions focussed on the suitability of the OECD’s CRS database for monitoring Aid for Trade flows, the importance of Aid for Trade being linked to the general discussion on aid effectiveness and the prospects of EU member states meeting their Aid for Trade commitments.

Presentations:

"Monitoring aid for Trade", Martina Garcia, OECD

"Aid for Trade ≠aid for trade: Monitoring and evaluation", Dirk Willem te Velde, ODI

Session 4 - How is / should the UK respond to the AfT agenda?

In the fourth and final session on “what can the UK do”, DFID presented their AfT strategy publicly for the first time, which included a focus on building country capacity, ensuring trade leads to inclusive growth, the regional elements and improving the international system; and ECDPM highlighted the link between AfT and the ongoing Economic Partnership Agreement negotiations between the EU and ACP, especially concerns about long term delivery of assistance by the EU.

Discussions focussed on the channels through which DFID will deliver its AfT (mostly through multilaterals), the issue of what will be delivered post the 2010 commitments and the challenging of supporting developing countries to be better demanders.

Presentations:

"DFID Aid for Trade strategy", Shiona Ruhemann, DFID

"Development Support for Economic Partnership Agreements", Corinna Braun-Munzinger, ECDPM

TO ACCESS THE FULL REPORT FROM THIS WORKSHOP, CLICK HERE

In the second half of 2008 CUTS LRC will be organising similar workshops on Aid for Trade in Belgium, Germany and Netherlands, in cooperation with NGO partners in those countries.