How do you distinguish aid-for-trade from general ‘developmental aid'? There is some apprehension that aid-for-trade money could be diverted, and this would cut into the already low level of funds available for development aid to needy countries. Or, in other cases, existing development funds could be re-branded as aid-for-trade funds, with no effective increase in the level of aid. What are the ways in which such scenarios could be avoided in a transparent, predictable and binding manner?
The task force recommendations, as approved by the General Council in October 2006, give a very clear-cut definition of the differences between projects which should be branded aid-for-trade and other projects. The recommendations give a set of categories of activities which should be considered aid-for-trade to help in this distinction, that is, trade policy and regulations, trade development, trade-related infrastructure, building productive capacity, and trade-related adjustment.
It remains unclear whether the new thrust in aid-for-trade, with regard to funds, will result in ‘additional financing'. Vagueness with respect to the freshness and additionality of funds announced towards aid-for-trade, at the Gleneagles G8 summit and the Hong Kong WTO Ministerial conference, seems to be -- for the moment -- dispelled by the generally held view on growth prospects of trade-related financing in the context of the overall increase expected in Official Development Assistance (ODA).
Aid-for-trade is perceived by many as part of the overall strategy of developed countries to divide developing countries into blocks of competing interests, while trying to underwrite existing asymmetries and imbalances in the global trading system. What is your take on the politics of aid-for-trade?
The aid-for-trade initiative is revolutionary in itself; the international consensus on the limitations of trade and the new role of the WTO in aid is an extremely significant step. Aid-for-trade is important in its own right, as vast investments in developing countries are necessary to make trade an engine of growth, development and poverty reduction. Even though a renewed and massive initiative on aid-for-trade could constitute a valuable complement to the development round, its fate should be separated from that of the Doha negotiations. Indeed, as now agreed by all WTO members, it would be better not to consider aid-for-trade a substitute for enhanced agricultural and industrial market access, the core expected deliverable of the Doha negotiations.
Similarly, using aid-for-trade to induce developing countries to open their markets or to divert attention away from the crafting of better trade rules would be adverse to their interests.
Do you think aid-for-trade could act as an effective instrument in helping poor countries benefit from trade? If yes, what would be the elements of an aid-for-trade strategy that could address the supply-side constraints and other internal barriers to trade in developing countries? Do you have any specific proposals in this regard?
The whole rationale of aid-for-trade is to help countries benefit from trade; indeed, while trade can be a tool for development, countries will need infrastructure, institutions and technical capacities to truly seize the opportunities any liberalisation under the WTO would bring. To that end, aid-for-trade can be an effective instrument in helping developing countries manage their supply-side constraints to better benefit from the multilateral trading system, helping them finance some trade-related projects to overcome those constraints, and helping them cope with the adjustments they will be bound to make.
What is the institutional architecture you propose in order to strengthen the role of aid-for-trade in complementing and not undermining a country's own policy space for addressing its development priorities?
With regards to the architecture of aid-for-trade, the task force recommendations detail three different levels of responsibilities: a national level, a regional level and a global level. Country ownership is very strongly underlined in the aid-for-trade initiative, and the identification of needs, and thus the identification of development priorities, lies in the hands of each specific country. In-country coordination between the various stakeholders is deemed crucial, as is the involvement of the private sector in these needs-assessment exercises. At the same time, efforts should be directed towards making greater use of regional initiatives which, for many countries, could play an important role in facilitating trade and strengthening economic development.
There seems to be a resumption in the Doha Round talks now, post the Davos meeting. Concerns, however, remain over the stance of developed countries in aggressively pushing for increased market access with little regard for the developmental content and safeguards needed by developing countries. What do you think is the future of the Doha Round, and its chances of ensuring a course correction in the multilateral trading system?
The Doha negotiations have resumed, but differences remain making it difficult to conclude them. A combination of enhanced market access for products of particular interest to developing countries, significant reduction in agricultural subsidies and aid-for-trade would give some meaning to the development dimension of the negotiations. However, agreements in those areas remain elusive and developing countries need to continue their active participation in the negotiations to make ‘development' an integral component of the final Doha deal.
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