Private Sector Case Study
The international community has widely acknowledged the need for increased aid for trade in developing countries. In February 2005, the G-7 Ministers urged the World Bank and the IMF to design proposals aimed at providing greater aid to such countries for the purpose of facilitating their adjustment to trade liberalization and increasing their ability to profit from more open markets. Later on, at the Gleneagles G8 Summit of July 2005, the Heads of State agreed to increase aid to developing countries to expand their physical, human and institutional trade capacity. In December 2005, in their Declaration at the Sixth WTO Ministerial Conference, the Ministers backed the expansion of existing aid-related programs and established a new WTO work program on aid for trade. As conceived by international organizations and international cooperation, aid for trade covers at least 4 different fronts: 1. Capacity building for the formulation of trade policies, from the negotiation to the enforcement of trade agreements. 2. Funding for the creation of infrastructure to link domestic output to international markets. 3. Development of export supply, based on the concepts of specialization and comparative advantages. 4. Assistance for adjustment, with a view to both profiting from comparative advantages and mitigating adverse effects. Aid for trade is nothing new. Programs to support trade facilitation, infrastructure, development of export supply and assistance for adjustment have been around for some time now. This notwithstanding, the current situation, marked by the stagnation of multilateral negotiations, a resurge in the signing of regional trade agreements, the appreciation of the real exchange rate, and the initiatives to reduce poverty, has magnified the debate over the role of trade and businesses competitiveness as catalysts for development. According to WTO and OECD data, cooperation for development has contributed about US$ 25 billion in trade-related assistance in 2005, spread across the 4 fronts described above. Funding for infrastructure and development of export supply, including the improvement of the business climate, capture most of such resources. For the most part, cooperation and the current approach to aid for trade programs have focused on the group of least developed countries (LDCs), particularly in Africa and Asia. As a matter of fact, the Integrated Framework –the WTO’s aid for trade initiative– is focused on LDCs specifically.3, 4 Neither Latin America in general, nor Central America specifically, necessarily share the trade problems faced by LDCs. 3
The Integrated Framework (IF) is a process conceived to assist LDC governments in building trade capacity and integrating trade-related issues into national global development strategies. The IF is an international initiative through which the World Bank, ITC, IMF, WTO, UNDP and UNCTAD have joined their efforts to those of the least developed countries and donors to respond to the needs of LDCs to foster trade. This integrated approach started in October 1997 at the High-Level Meeting on Least-Developed Countries’ Trade Development, organized by the WTO.
Published on Sep 14, 2007
this report was prepared by the integration and trade sector (int) as a contribution to the regional meeting on mobilizing aid for trade: la...