Aid for Trade - how to deliver more and better aid for trade
The first Global Review meeting on Aid for Trade took place
on 21 and 22 November 2007. Trade and Development Minister Gareth Thomas
attended the meeting in Geneva of the
General Council of the World Trade Organisation (WTO). DFID welcomes this first
ever Global Review on Aid for Trade. Never before have all
154 WTO members,
including major multilateral institutions, come together to focus on how -
collectively – we can help improve countries' capacity to trade. This is a major
achievement that we fully support.
The meeting was hosted by Pascal Lamy, WTO Director-General and attended by:
- Robert Zoellick, President World Bank
- Dominique Strauss-Kahn
- Managing Director International Monetary Fund (IMF)
- Kemal Dervis, United Nations Development Programme (UNDP)
- Organisation for Economic Co-operation and Development (OECD) Secretary General, and
- heads of regional banks.
What was achieved at the Meeting?
The Global Review meeting underlined the importance of translating commitments into implementation plans. The review was a historical first, bringing together for the first time the international trade, development and financial communities to focus on integrating the most marginalised countries into global trading in order to ensure that poor people capture the benefits of increased trade. As stated by Pascal Lamy following the review:
"I think we've succeeded, which is a very first step, in establishing Aid for Trade as a priority in the trade community, in the development community, in the finance community, in the planning community,...connecting together trade people, finance people, development people, planning people...establishing the necessary connection and the necessary trust between these actors, and after all, connection and trust is something that takes us back to our core business in the WTO."
UK Pledges
The UK supported its international agenda on Aid for Trade with two specific “Aid for Trade” commitments.
The UK has pledged
commitment to increase Aid for Trade to £100 million per annum by 2010. This
pledge covers bilateral DFID spending only, against a narrow definition of Aid
for Trade, including: trade policy work, contributions to the
Enhanced Integrated
Framework and private sector development. This first commitment was
announced by
Tony Blair, as Prime Minister, in November 2005.
The second commitment was announced by Gordon Brown as Chancellor of the Exchequer in September 2006. He pledged to increase our total support for Aid for Trade including support for trade-related infrastructure by 50% by 2010 to $750 million a year. This pledge covers bilateral and multilateral DFID spending against a broad definition of Aid for Trade, to include infrastructure such as roads, ports, power and telecommunications. The UK fully expects to meet these commitments.
Origins of the Aid for Trade Initiative
Since 2005, the UK has been at the forefront in promoting the need to increase support for trade integration, the aim was to influence the international community to provide a step change in trade support. The initiative was supported by evidenced based policy. DFID sponsored international research. The research programme was chaired by Ernesto Zedillo and brought together respected international researchers from a broad spectrum of philosophies and countries.
Rationale for Aid for Trade
The research group found that the rationale for aid for trade is both political and economic.
- Political: Securing a multilateral trade agreement is expected to generate sizeable welfare gains to both developed and developing countries. In this sense it is a Global Public Good. But implementing trade reforms may well impose economic and social costs on some countries and require them to take additional measures to help with the adjustment and reform process.
- Economic: Developing countries almost doubled their share in non-oil world exports, from about 20% to 37% over three decades. This was accompanied by strong economic growth. Trade integration is a core element of sustainable growth. However, in terms of integrating trade into development strategies, low-income countries have generally lagged middle income countries. Incentives to integrate trade into PRSPs need to be seen as part of the increased attention to growth-oriented strategies under the PRSP process.
