A view during the World Trade Organization Aid for Trade Global Review in 2017. Photo by: Jay Louvion / WTO / CC BY-SA
A view during the World Trade Organization Aid for Trade Global Review in 2017. Photo by: Jay Louvion / WTO / CC BY-SA

The world’s least developed countries have the smallest share of the global trade market, but highest reliance on a small number of commodities to support their economic growth — a key topic on the agenda at the World Trade Organization’s Global Review of Aid for Trade in July.

The review, which will take place July 3-5 at WTO in Geneva, is set to highlight these growing challenges for less-developed countries in a climate of increased protectionism as it calls for Organisation for Economic Co-operation and Development’s Development Assistance Committee members to recommit to the aid for trade agenda.

“It is a reminder that so much has already been done but so much still needs to be done,” Ratnakar Adhikari, executive director of the Enhanced Integrated Framework Secretariat, told Devex. “And despite the fiscal squeeze facing a number of countries, it is important that the developed countries — especially DAC donors — continue to provide strong support to aid for trade.”

“LDCs combined have a share of 0.95 percent of global trade.”

— Ratnakar Adhikari, executive director, Enhanced Integrated Framework Secretariat
EIF is a multilateral partnership within WTO dedicated to assisting LDCs in their use of trade as an engine for growth, sustainable development, and poverty reduction. EIF works directly with governments to improve systems, capacities, and infrastructure that can advance markets and trade opportunities. And EIF is important in the development of a global review agenda and research supporting it.

In an interview, Adhikari highlighted the key messages between and with donors as part of the global review to help the world’s most disadvantaged economies grow markets and benefit from global trade.

Focus on economic diversity
“So far almost $300 billion has been committed to the area of aid for trade,” Adhikari said. “Out of that LDCs where we are working actively have received a share of close to 25 percent. This is a major share but at the same time how it is effectively utilized is another question that needs to be addressed.”

How to improve the effectiveness of aid for trade is an important discussion to grow the market share of LDCs, as well as the issue of diversifying economies.

“LDCs combined have a share of 0.95 percent of global trade,” Adhikari said. “That is very limited. There was a marginal increase in 2017 after a decline of a three year period. The major culprit here is the export concentration. There are a number of LDCs who have an export concentration level which is almost close to 97 percent.” For example in Angola, almost 97 percent of exports are concentrated on one sector — oil and petroleum.

Aid for trade, Adhikari said, was an avenue to help LDCs and other economies broaden the scope of their market and reduce the reliance on single products that could affect the economy and livelihoods in the event of market shocks. And how to support and facilitate that will be an important point of discussion.

Focusing on inclusive trade
A growing area of focus is an inclusive trade agenda that creates opportunities for marginalized members of the community, Adhikari said, noting that aid for trade aims to align with the broader objectives of the Sustainable Development Goals.

“The SDGs — which calls for inclusive trade — this includes not only people in the mainstream but people in the margins including minority communities, farmers, small and medium enterprises, and people living with a disability,” he said. “All kinds of people should benefit from trade and it is now the new normal — partly because of the SDGs and partly because of the private sector’s commitment to the cause for inclusive trade.”

At the global review agenda, discussion will include the best ways to achieve inclusive trade. Supporting the development of policy and frameworks, Adhikari explained, is important to ensure both government and private sector are aligned with what inclusive trade means and how it can be measured.

Understanding the emerging trends
Coinciding with the review will be the release of a comprehensive study on aid for trade globally: “Aid for Trade at a Glance.” This will show the changing trends within aid for trade, including the changing needs and priorities of development assistance in the area.

“The publication analyses the priorities and sees how they have evolved since 2006 when the aid for trade initiative was launched,” Adhikari said. “In the early days, the priority was agriculture — which still remains a priority.”

Agriculture, transportation, and industry today account for 70 percent of aid for trade. But the new figures show that there is more investment going into the ICT sector as countries see opportunities to grow their markets through online sales; and through better communications, they can better engage with business partners globally.

But the impact of an increased focus on infrastructure funding and banks, which fall under the banner of aid for trade, may also be seen in the data. Whether this leads to countries diverting funds away from other important areas — including building capacity through education, investing in equipment to improve production, and standards — will be something Adhikari will be looking for in the numbers.

The impact of aid for trade
The message at the global review is the value of aid for trade and the positive impact it has on developing countries. To illustrate this, case studies will highlight what aid for trade does and how it makes an impact. EIF will be among the organizations sharing their case studies.

“We have found that through government ownership we have been able to successfully achieve results,” Adhikari said. “In Burkina Faso, we have helped tweak mango production process to achieve significant results. They were initially drying mango on a wooden table. What the government did through a project we supported was to give them a grant to install a steel table that is more hygienic with little wastage. Private sector enterprises thought that was a great idea and purchased more themselves to create an impact.”

Education on standards, good agricultural practices, and understanding organic certification was among the avenues of support that helped to triple exports as part of this project.

“As a result of that, 3,000 more people were employed in the sector,” he said.

Case studies such as this will demonstrate the diversity of thinking and solutions to help make aid for trade a success — with sometimes smaller and simpler solutions more effective than large-scale infrastructure initiatives.

Lisa Cornish/devex.com


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