The power of Aid for Trade
This year marks the tenth anniversary of the first Global Review of Aid for Trade. I am incredibly proud to have been part of the process from the start: first in my role as Chief of Staff at the World Trade Organization (WTO) and now as Executive Director of the International Trade Centre (ITC).
No one can dispute the impact Aid for Trade has had on global development since the WTO initiative was set in motion by its Hong Kong Ministerial Conference in 2005. From 2006 to 2015, an estimated US$ 264.5 billion was disbursed for financing Aid for Trade programmes and projects, representing a significant share of aid earmarked for trade-led development.
Aid for Trade has also played an important role in the global efforts to attaining the United Nations’ Millennium Development Goals and especially on partnerships (MDG8) and sustainable diversity (MDG7).
Aid for Trade will again be a crucial vehicle for attaining the goals and targets in the new 2030 Agenda for Sustainable Development.
When the Aid for Trade initiative was launched, it was primarily thought of as a technical-assistance tool to ensure that developing countries, and least developed countries in particular, had the supply-side capacity to take advantage of new marketaccess opportunities. It has proven to be much more powerful than that: aid for trade facilitation, for example, has gone from only US$5.8 million in 2002, to US$416.5m in 2015.
At its most effective, Aid for Trade is a vehicle that ensures greater inclusiveness, creating opportunities for micro, small and medium-sized enterprises (MSMEs), and for women and youth. Building effective trade capacity in developing countries has direct knock-on effects on other development priorities such as education, health and wellbeing: more and better jobs enable people to send their children to school and pay for basic and better health services.
A strengthened relationship between the trade, aid and development communities has been a direct outcome of the Aid for Trade initiative. The development community has better understood the incredible power of trade as a tool for poverty reduction and sustainability; and the trade community has recognized the need to play an active part in development, not least to ensure future businesses opportunities. It is a win-win for both sides and the overall winner are people and MSMEs in developing countries.
Despite the success of Aid for Trade, now is not a time to rest. Key funders have seen their development aid budgets under strain but demand for assistance from our partners in the field has increased. What we need is to accelerate our efforts to respond to these needs and demands but to make the extra effort to show smarter partnerships, greater impact and more sustainable results.
Thanks to the important monitoring work done by the WTO and the Organisation for Economic Cooperation and Development, we have the facts on Aid for Trade. We know what the gaps are and which ones need to be filled. We have more tools today than we did a decade ago to make Aid for Trade even more successful. Ratifying the WTO Trade Facilitation Agreement, which entered into force earlier this year, and above all e-commerce, offer new possibilities for businesses in developing countries to enter international markets.
But to harness the potential success of such new tools we need to recommit to the agenda and ensure trade impact for good.