International Conference on Linkages between
Trade, Development and Poverty Reduction
What is Aid for Trade in WTO Context?
Nairobi, Kenya, 15th March 2007
Why Aid for Trade?
A4T is a part of overall aid to development to help
developing countries to:
•
•
•
•
Benefit from further liberalisation
Overwhelm constraints to trade and reduce
potential negative impact of liberalisation
Enhance competitiveness
Play an active role in the international trading system
Ultimate goal:
Use trade as an instrument for poverty
alleviation and accelerated rate of growth to
reach country specific development goals
Volume of A4T
Trade-related
Assistance in 
2004
Over
24 percent of
total ODA
New financial pledges for the
creation of an A4T Agenda:
US$2.5bn
Trade-related
Technical assistance
Nearly
US$23bn
US$7.3bn
US$12.9bn
Productive
capacity
Infrastructure
building
•Japan: US$10bn over 3 years
•US: US$2.7bn a year by 2010
•EU: US$2.6bn a year by 201à
How has A4T come on WTO agenda?
Through the repeated disappointing results of former
initiatives, it was acknowledged that market access does
not automatically lead to increased growth and trade:
• As early as 1968: UNCTAD established GSP
• Uruguay Round: “Trade not Aid”
• WTO-UNCTAD-ITC in 1996: Joint Integrated Technical
Assistance Programme
• WTO members in 1997: Integrated Framework
• Several initiatives: US launched AGOA in 2000; EU started
EBA in 2001.
The Integrated Framework
The Integrated Framework for Trade-related technical
assistance to LDCs was launched in 1997 by the six
founder agencies - IMF, ITC, UNCTAD, UNDP, WB, WTO-.
Main Purposes:
The IF is used to
coordinate
trade-related
assistance and ensure
coherence with the country
priorities and development
strategies.
The Task Force on A4T has
advocated for an Enhanced
Integrated Framework
•Support LDC governments in trade capacity
building and integrating issues into national
development strategies
•Continue to respond to trade development
needs
•Ensure maximized use of scarce resources in
support of enabling LDCs to be full and active
players and beneficiaries of the MTS
•Coordinate donors’ response
Hong Kong WTO Ministerial Declaration
Paragraph 57 on A4T
In December 2005, at the Sixth WTO Ministerial of the Doha Round in
Hong Kong, the necessity of an A4Twas recognized. A Task Force was
requested to provide recommendations on how to operationalise A4T.
“Aid for Trade should aim to help developing countries,
particularly LDCs, to build the supply-side capacity and
trade-related infrastructure that they need to assist them
to implement and benefit from WTO Agreements and more
broadly to expand their trade. Aid for Trade cannot be a
substitute for the development benefits that will result from
a successful conclusion to the Doha Development Agenda
(DDA), particularly on market access. However, it can be a
valuable complement to the DDA”
Aid for Trade Coverage
o Trade policy and regulations: capacity building and technical
assistance for trade policy mainstreaming, compliance with trade
standards and implementation of trade agreements.
o Trade development: improvement of business climate, promotion of
investments and exports, better access to finance and insurance.
o Trade-related infrastructure: transport, energy supply,
communications.
o Building productive capacity: removal of supply side constraints to
boost productivity.
o Trade-related adjustments: accompanying measures to assist
countries to benefit from liberalised trade.
Recent trend in A4T
In October 2006,
the General
Council of WTO
endorsed the
recommendations
of the Task Force
on A4T submitted
in July 2006.
The Paris Declaration
Principles
OWNERSHIP
HARMONISATION
MUTUAL
ACCOUNTABILITY
ALIGNMENT
MANAGING
FOR
RESULTS
Three main plans of action
1. Strengthening the “demand side”: commitment to countrydriven approaches; government capacity building; national dialogues with
all relevant stakeholders
2. Strengthening donor “response”: donors need to integrate
trade more effectively into their aid programming;
donors’ response has to be tailored to the country
priorities
3. Strengthening the bridge between
“demand” and “response”: matching donors’
resources and countries’ needs; need for a coherent
collaboration; assist countries in mainstreaming trade
into their national development strategies.
Which countries are the A4T funds likely
to be directed to?
• LDCs’ needs:
 A4T can help strengthen LDCs trade capacity, increase
competitiveness and integrate their economies into the MTS.
• Non-LDCs’ needs:
A4T can help mainstream trade into their national development
strategies and ensure national consultations include all relevant
stakeholders.
• Regional needs:
 A4T can help reduce the constraints
involving cross-border, sub-regional or
regional issues. Ex: cross-border infrastructure,
transit or management of common good.
Some of the expected benefits for poor countries
• Better business climate through infrastructure improvement and trade
facilitation for export and domestic ma rkets
• Increase in productivity, trade, employment
• Increased capacity to seize trade opportunities reach for economies
of scale
• Seize economic opportunities of former rounds of negotiations
• Participate more actively to a more
equitable MTS
• Reduction of possible negative effects
of liberalisation
• Use benefits of growth to reach
development goals
These benefits should not be conditional upon the Doha Round
completions
Some further needs under discussion
Diverse adjustment costs such as:
• Erosion of preferential market access
• Fear of rising food prices in net food importing developing countries
• Adverse terms of trade shocks following the end of the Textile and
Clothing Quotas Agreement
• Government revenue losses
• Costs of compliance to product standards
• Implementation costs of WTO agreements
• Resources needed for social costs due to loss of livelihoods activities
and increased unemployment
A4T as a compensation
for losses

A4T as an investment
in future welfare
Difficult calculation of the amount of A4T needed
Some apprehensions of the poor countries
• Developing countries do not have the same concerns and they fear
their own country specific needs could be bypassed by A4T
• Some scepticism about the credibility of donors’ commitment
• Insufficient funds for significant
impact: proper needs
assessments are required
• Reallocation of funds from the
development budget
• A4T put forward as a substitute for a real non-discriminatory trading
system
• Possible conditionalities and bias towards donors’ interests
• Inadequate capacity building
Further initiatives needed for A4T implementation
Need for a legal and institutional framework including:
• Funding commitment made binding
• Establishment of enforcement mechanisms
Need for an authoritative description of A4T
including:
•Financing mechanisms
•An non-exhaustive list of A4T needs
•Concrete steps for implementation
Need for a reliable global monitoring and
evaluation system including:
•Data collection and analysis at different levels of
investigation
•Management for results: focus on outputs
•Broad and systematic dissemination of results