Why Aid for Trade matters to small-island developing states
poorer countries towards integration in global trade
Trading among countries has the potential to be an engine of growth that lifts millions of people out of poverty. However, many developing countries face obstacles that prevent them from fully benefiting from global trade. Some are in export markets, which the Doha Development Round of multilateral trade negotiations aims to reduce or eliminate. These include traditional tariffs as well as non-tariff barriers that are increasing in significance. Barriers found at home, including a lack of knowledge, excessive red tape, inadequate financing and poor infrastructure, can also act as major impediments for exporters.
One aim of the Aid for Trade initiative is to address such supply-side constraints. It therefore has the commendable objective to assist developing countries, in particular the least developed countries (LDCs), to play a more active role in the global trade, using it as an instrument for economic growth and poverty alleviation. Aid for Trade, however, is not a substitute for trade opening, but a necessary and increasingly important complement. In fact, it embraces a new architecture to facilitate the transition of poorer countries towards integration in global trade. For small-island developing states (SIDS) such as Mauritius, it has a huge potential to help them overcome the inherent constraints of small economies.AMBITIOUS REFORM
Mauritius played a significant role in its promoting Aid for Trade as a major development agenda of the Doha round and was actively involved in the World Trade Organization’s (WTO) Aid for Trade Task Force, established in February 2006, as the coordinator of the Group of Countries. Mauritius also took the initiative of convening a High-Level Consultative Meeting on Aid for Trade in July 2006, whose objective was to build advocacy for the initiative. It presented its ambitious reform and restructuring programme in anticipation of the conclusion of the Doha round and for support to be put in place in the context of the proposed Aid for Trade. In addition, many of Mauritius’s proposals were mainstreamed in the recommendations of the WTO task force.
Mauritius also participated in the twoday regional review, held in Dar-es-Salaam, Tanzania, in October 2007. The aim of this meeting was to gather financial resources to help developing countries in Africa utilize trade more effectively as a tool for economic development, job creation and poverty alleviation. Mauritius participated actively in the Regional Review and presented a paper to showcase its reform programme.COMPETITIVENESS
In Mauritius, the Ministry of Finance and Economic Development plays an active role in aid coordination. Country presence of development partners in terms of number of offices and amount of development assistance has increased since 2008 but remains rather modest. Under the Economic Partnership Agreement, Mauritius obtained €950,000 (US$1.06 million) under the regional indicative programme for short-term projects and €10 million under the European Union’s 11th European Development Fund (EDF), which will end in 2020. The funds are being utilized to create a more conducive business environment and increase competitiveness of local operators.
In Mauritius, funds under the 11th EDF are geared towards two key projects: an e-business licensing system (€7 million) and implementation of the country’s Intellectual Property Development Plan (€3m). The e-licensing system, spearheaded by the Board of Investment, aims to reduce the bureaucratic procedures for business registration, permits and licensing. It will allow users to identify the licenses they need to start a business and apply for the relevant permits. The e-licensing project is in the pipeline and will reduce time lag in starting and developing business projects. It will also help Mauritius to improve its rank in the World Bank Ease of Doing Business Index.
The second project is related to intellectual property (IP) rights. It aims to put in place a comprehensive framework encompassing all aspects of IP, including the modernization of laws; accession to new IP treaties; the establishment of an online platform for operators to have access to IP data; and support for the commercialization of IP assets, amongst others, with a view to attracting investors in high value-added sectors such as software development, pharmaceuticals and medical devices.ACCELERATING DEVELOPMENT
Aid for Trade has the laudable objective of accelerating the pace of development of developing, LDCs and SIDS economies to bridge the economic divide with more developed economies.
However, for upper middle-income economies like Mauritius, it is crucial not to fall victim of their economic development success. It is therefore crucial to stay part of – and engaged in –the Aid for Trade process to ensure continued economic advancement.