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A role for Aid for Trade in development post-Bali

Date: 
2 December 2013

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Dirk Willem te Velde is head of ODI's International Economic Development Group

Coffee cash - Gates Foundation (Creative Commons licensed via Flickr)

Dirk Willem te Velde, introduces a miniseries how Aid for Trade (AfT) has furthered progress in development, and what the future for AfT might hold after the WTO Ministerial Conference in Bali this December.

As the latest round of WTO trade negotiations in Bali approaches, one crucial question has been on my mind for some time: what is the future role of Aid for Trade (AfT) at the WTO?  Both developed and developing countries still need to determine the scope of AfT post-Bali, and a two year ODI-led project on Aid for Trade aims to inform these discussions by examining whether and how AfT contributes to development progress.

It is clear from our research that AfT can be seen as a successful initiative in promoting resources – one that owes much to the leadership of organisations and individuals in developed and developing countries. It can also be improved as it adjusts to the new global economic environment. We argue that the Trade Ministerial Declaration from Bali (if there is one) needs to include a paragraph that projects a forward-looking plan on AfT.

A number of researchers from ODI, ECDPM and DIE have written papers on key aspects of AfT such as value chain development, targeted infrastructure for agricultural trade, regional integration, lessons from emerging markets, the econometric effects of trade facilitation and other issues, with their key messages summarised in a short briefing. The papers have also been published as part of an ODI-Commonwealth book, and we have published a comprehensive synthesis of the evidence.

We have developed collaborative approaches with organisations such as the Commonwealth Secretariat, OECD and WTO. We have supported an OECD policy dialogue on AfT, including my own report on the way forward in the run-up to July’s AfT Global Review and on issues such as regional integration, private sector development, value chain development and showing results. During the global review we examined the effectiveness of AfT and future directions at a joint meeting with the Commonwealth Secretariat. We have introduced the concept of third generation AfT, where AfT responds to a rapidly evolving trade and finance landscape. Many countries are now considering this approach, including the UK.

Our research has shown that we need to go further. We need to keep reinvigorating the concept of AfT so that it remains relevant in the future. There is an important role for AfT at the WTO (e.g. as part of Trade Facilitation), but also separately, e.g. in the context of post-2015 discussions on finance and development. There is a rich agenda on this in the coming year, culminating in the UNGA and the UN Secretary-General’s synthesis report ahead of the 2015 follow-up to the 2002 Monterrey conference on Financing for Development.

We are organising, together with the Commonwealth Secretariat and SAWTEE, a meeting in Bali on the future of AfT where we will discuss all of these issues (my colleague Yurendra Basnett has written a background paper on future directions for AfT). Alongside this, we are running two blog series to inform the discussions. The first, on the Business Fights Poverty website, will feature blogs from ODI, OECD, and the WTO. The second, on the Development Progress website will feature a blog by Marie-Agnes Jouanjean of ODI on the role of AfT in addressing non-tariff barriers to trade (NTBs) that, according to her research, have emerged as important impediments to agricultural trade. She'll be followed by Olivier Cattaneo, an international expert on trade and development, who will take a critical look at the AfT initiative and suggest we need a better research agenda on showing impact because this could mobilise more resources for AfT. Finally, Jean-Luc Demarty of the European Commission will discuss the importance of trade facilitation.

Watch this space for more commentary, information and ideas.