UNCTAD yesterday (Tuesday) issued a policy brief on Aid for Trade in the lead up to UNCTAD XIII. Some key paragraphs from the policy brief, which can be accessed from the link below:
- The Aid for Trade programme was launched at the 2005 WTO ministerial meeting in Hong Kong. Its reported aims are to bring greater coherence to existing trade-support programmes and to generate additional funds to assist developing countries to build supply capacity and trade-related skills, so that they can adjust to the post-Doha trading environment. There are some positives to take on the first of these aims, but despite the expectation of supplementary resources ("additionality"), much of the programme has been a repackaging of existing trade-related aid flows. This has worrying implications for the future of the scheme and for the developmental impact of aid more generally.
- The Aid for Trade initiative has raised significant expectations in the development community, especially in recipient economies. Trade capacity needs (infrastructure) and sectoral priorities (energy and agriculture) remain crucial concerns in most countries. The key question is: have the process and resources provided supported the achievement of the goals of the programme, particularly in terms of enhancing trade capacity and reducing poverty?
- There is growing consensus around the need to increase the predictability of aid, address the fragmentation of flows among alternative sources and destinations, and transfer ownership of aid programmes to the recipient countries. The lack of a permanent forum to discuss these issues from the perspective of recipient countries continues to hamper constructive debates about the international aid architecture (including Aid for Trade). Filling this gap should become a priority for the international community.
- The focus of cooperation should shift from aid to development effectiveness, i.e. it should address both the quality and the quantity of aid. These goals will be more readily reached if Aid for Trade achieves an appropriate scale, includes genuine new funding in excess of current aid commitments, and is accompanied by appropriate trade and industrial policies adapted to local conditions and tailored to breaking the pressing constraints on growth and structural transformation.
- The developmental impact of Aid for Trade might be undermined by its dual location between the aid regime and the multilateral trade agenda. Aid for Trade to LDCs should not be hostage to the single undertaking of the Doha Development Round. It should continue to provide resources to expand LDC exports, build up productive sectors, and improve policy framework, thus contributing to poverty reduction and constructive integration of the LDCs into the global economy.
The four page policy brief can be accessed here.