In recent weeks, I have travelled literally around the globe meeting government officials, development experts and businessmen, as we seek generate momentum for a new kind of development strategy – Aid for Trade.
Here in the WTO, we are busy making trade rules and monitoring their compliance, settling trade disputes and training delegates from the developing world on trade agreements. We are not a development agency per se. Although about 20% of our roughly 180 million Swiss Franc budget goes to training, we do not have the expertise of the World Bank, UNDP or the regional development banks, when it comes to distributing aid for development. We are doing our part for development through the Doha Development round of global trade negotiations. An ambitious and development-oriented Doha agreement would improve the playing field and create a wealth of trading opportunities for developing countries that were not evident in the past.
But opportunities are one thing, results are quite another. Many countries lack the capacity to seize opportunities of a trading system offering them greater market access and new rules which will impact on trade in commodities and other products exported by developing countries. Take Kenyan producers of cut flowers or mangoes from Mali. Opening richer markets to these exports will only translate into real business if local producers can meet pesticide standards in exports markets, if cold storage facilities are available and if efficient transport exist in these countries.
Billions of dollars are therefore needed for technical assistance, for boosting productive capacity, for helping diversification or improving infrastructure just to name a few. By increasing this capacity, we can create a platform to help countries help themselves through trade. On this all parties agree. There is also a clear consensus that if this programme is to work, we need a different approach from other programmes. Building bridges and roads are obviously important but what we have learned is that first you have to change mindsets. No longer can aid for development programmes be imposed from above on recipient countries. Poor countries need the assurance that Aid for Trade programmes are designed to address their own particular trade capacity needs.
This means too, that recipient countries must apply themselves fully to mainstreaming trade in their development and poverty alleviation strategies. Setting priorities is never easy to do when it comes to allocating resources, but having 50 priorities means having no priorities. Even if resources for Aid for Trade are doubled – to around $50 billion – they will remain finite. Countries must focus on the two or three key obstacles that have held back their exporters. Governments must think of ways to co-operate regionally to generate economies of scale and efficiencies in transport, customs practices and the supply chain.
Donor countries and international financial institutions have responsibilities as well. More resources are certainly required but beyond the sums of money given, donors need to utilise effective systems for delivering funds by fast-tracking disbursement and reducing red-tape.
New mindsets from donors and recipients are essential, but without solid involvement from the private sector, no Aid for Trade programme can be expected to function properly. It is the companies that trade and it is the companies that can mobilise investment resources which dwarf anything the public sector can provide.
The three regional Aid for Trade meetings just concluded in Lima, Manila and Dar es Salaam were a valuable means of generating ideas and momentum for the future. We also just launched a development programme for the world poorest countries – the Enhanced Integrated Framework. Now we must build on that momentum in the coming weeks and sharpen our focus, so we have a clear idea as to the projects to which the resources would be dedicated, the timetable for delivery of funds, the means for measuring and assessing results and the follow-up mechanism in which all parties can map the way forward. For this, regional development banks have a great deal to offer.
Aid for trade can never replace a successful Doha agreement, which seeks to rebalance the world trading system in favour of developing countries. But as a complement to the Doha round and sound domestic policies, Aid for Trade is essential. We’ve seen an unprecedented level of commitment to this project from all parties. Now we must mobilize more and better Aid for Trade.
These are just my first impressions over this topic. We will obviously have a chance to discuss this and many other topics over the coming months. Since we are entering into quite a busy period in the Doha Round of trade talks, I may just have to do it by getting up earlier or squeezing my jogging!
Hope to hear from you soon.
Copyright image : Eric Piermont, AFP