AID FOR TRADEAID FOR TRADEWhy, what and how? 2Why Aid for Trade?Why Aid for Trade?3Trade can be an engine for growth that lifts millions of people out of povertyButmanydevelopingcountriesface barriersbarriersthat preventthemfrombenefitingfromtheworldtrading system 4Someofthesebarriersarein exportmarketsexportmarkets whichtheoha!oundofmultilateraltrade negotiationsaimstoreduceoreliminate"These include non#tariff barriers $ which are increasing in significance $ as well as traditional tariff barriers" 5Butinternalbarriers$lackofknowledge, excessiveredtape,inade%uatefinancing,poor infrastructure $ can be &ust as difficult for exporters to overcome Targettingthese'supply#side(constraintsiswhat Aid for Trade is all about 6Aid for Trade is part of overall development aid, butwiththespecificob&ectiveofhelping developingcountries,inparticulartheleast developed,toplayanactiveroleintheglobal tradingsystemandtousetradeasan instrument for growth and poverty alleviation")tisnotasubstitutefortradeopening,buta necessaryandincreasinglyimportant complement7Increased trade, competitiveness and growthAid for Tradetrade reformentrepreneurshipprivate investmenttrade-relatedcapacity andinfrastructurecatalyst8There are There are fourfour main areas where main areas where Aid for Trade is needed Aid for Trade is needed Trade policy and regulationBuildingcapacitytoformulatetradepolicy, participateinnegotiationsandimplement agreements 9There are There are fourfour main areas where main areas where Aid for Trade is neededAid for Trade is neededEconomic infrastructure)nvesting in the infrastructure $ roads, ports, telecommunications, energy networks $ needed to link products to global markets)nSub#SaharanAfrica,alone,annualinfrastructureneedsare *+,#-- billion a year, while spending is about *+. billion 1There are There are fourfour main areas where main areas where Aid for Trade is neededAid for Trade is neededProductive capacity buildingStrengtheningeconomicsectors$fromimproved testinglaboratoriestobettersupplychains$to increase competitiveness in export markets 11There are There are fourfour main areas where main areas where Aid for Trade is neededAid for Trade is neededAdjustment assistance/elpingwithanytransitioncostsfromliberali0ation$ preference erosion, loss of fiscal revenue, or declining terms of trade 12Three export stories and how Three export stories and how Aid for Trade can make a differenceAid for Trade can make a difference13Dair! "rodu#$s from $he %!r&!' Dair! "rodu#$s from $he %!r&!' Re"u()i#Re"u()i# Fa#in& si&nifi#an$ su"")!*side #ons$rain$s+ Fa#in& si&nifi#an$ su"")!*side #ons$rain$s+ The 1yrgy0 !epublic could be a successful exporter of dairy productsBut there has been a +23 drop in production in recent years The most serious supply#side constraints include45ackofappropriatestandardsandtestingservices6i"e"S7S#control and breed selection85ack of cold storage and transportation facilities5ack of infrastructure for milk distribution5ack of interstate co#operation14,u$ f)owers from %en!a,u$ f)owers from %en!a -a.in& "ro&ress/ (u$ "ro()ems remain+ -a.in& "ro&ress/ (u$ "ro()ems remain+ Thecutflowersectorhasseenagrowthrateof9:3 annuallyoverthelast+:years,partlybecauseof investments in Aid for Trade, such as4 ;ew cold storage and transportation facilities)mproved cargo facilities at ;airobiormed innovative business partnerships)mprovedtestingfacilitiesandmetinternational standards)ncreasedcoldstoragefacilities6reducingpost#harvest loss8Built a new transport corridor 6reducing shipping time from -: to +- days817Average annual growth rate of almost 9.3 from -...#-..?-an&oes from -a)i-an&oes from -a)i To$a) e0"or$s of man&oes from -a)i are s$eadi)! To$a) e0"or$s of man&oes from -a)i are s$eadi)! in#reasin&in#reasin&182imi)ar #ha))en&es e0is$ a#ross man! 2imi)ar #ha))en&es e0is$ a#ross man! de1e)o"in& #oun$ries and re&ionsde1e)o"in& #oun$ries and re&ions)ntheAndean @ommunity,trucks spend more than half of the total &ourney time at border crossingsTransportcostsfor tradewithinAfricaare more than twice as high asthosewithinSouth Aast Asia197owergenerationcostsin Burkina >aso are more than four timesthecostsinneighbouring @Bte drance7oweroutagesin=alawi average9.daysperyear$ causingproductdamageand delaysinproductionand packaging that add -:3 to costs2imi)ar #ha))en&es e0is$ a#ross man! 2imi)ar #ha))en&es e0is$ a#ross man! de1e)o"inoun$ries and re&ionsde1e)o"inoun$ries and re&ions2++?daystomovea container from the factory inBanguiinthe@entral African!epublictothe nearest portSametransactiontakes fivedaysfrom @openhagen 2imi)ar #ha))en&es e0is$ a#ross man! 2imi)ar #ha))en&es e0is$ a#ross man! de1e)o"inoun$ries and re&ionsde1e)o"inoun$ries and re&ions212imi)ar #ha))en&es e0is$ a#ross man! 2imi)ar #ha))en&es e0is$ a#ross man! de1e)o"inoun$ries and re&ionsde1e)o"inoun$ries and re&ions=ostdirectflight between@hadand ;igerisvia>rance$ over 2,... kmCnlyoneflightaweek fromBanguiinthe @entralAfrican !epublic to Aurope22The resu)$3 A hu&e missed o""or$uni$!The resu)$3 A hu&e missed o""or$uni$!>or example, if Africa en&oyed the same share of world exports today as it did in +DE., exports would be *++D billionhigher$e%uivalenttoaboutfivetimescurrent aid flows 23What is happening?What is happening?242hare of Trade Re)a$ed ODA in O1era)) 2hare of Trade Re)a$ed ODA in O1era)) De1e)o"men$ AidDe1e)o"men$ Aid4ase)ine 22*25 a1era&eTrade policy & regulationsEconomic infrastructureProductive capacityGB!on-sector alloca"leDe($ re)ief-u)$i*se#$or ini$ia$i1esEmer&en#! aidAdminis$ra$i1e #os$ocial & Administrative Infrastructure Edu#a$ion 5ea)$h 6o1ernan#e25O1era)) dis$ri(u$ion of $rade re)a$ed O1era)) dis$ri(u$ion of $rade re)a$ed ODA (! "ro&ram and "ro7e#$ ODA (! "ro&ram and "ro7e#$ Source: OECD#$ million %&''( constant prices and e)change rates*Baseline &''&-&''+ average26To$a) $rade re)a$ed aid (! donorTo$a) $rade re)a$ed aid (! donor6baseline -..-#-..: average8FS* million2our#e+OE,D27Trade re)a$ed aid as share of donor8s se#$or Trade re)a$ed aid as share of donor8s se#$or a))o#a()e ODAa))o#a()e ODA6baseline -..-#-..: average89er #en$2our#e+OE,D6)o(a) (ase)ine:22*25;A1era&e :39mu)$i*#oun$r!?-I,2@-I,sO@I,s@D,sFS* millionSource: OECD3Trade "o)i#! and re&u)a$ions (! donorTrade "o)i#! and re&u)a$ions (! donorFS* millionSource: OECD31Trade "o)i#! and re&u)a$ions (! re&ion Trade "o)i#! and re&u)a$ions (! re&ion Afri#aO#eania2ou$h and ,en$ra) Ameri#a2ou$h and ,en$ra) AsiaFar Eas$ AsiaEuro"eFS* million13135515632843Source: OECD32E#onomi# infras$ru#$ureE#onomi# infras$ru#$ureSource: OECD

369121521 22 23 24 25Euro"ean #oun$riesin $ransi$ionRe&iona)>mu)$i*#oun$r!?-I,s@-I,sO@I,s@D,sFS* million33E#onomi# Infras$ru#$ure (! donorE#onomi# Infras$ru#$ure (! donorFS* millionSource: OECD34E#onomi# Infras$ru#$ure (! re&ionE#onomi# Infras$ru#$ure (! re&ionAfri#aO#eania2ou$h and ,en$ra) Ameri#a2ou$h and ,en$ra) AsiaFar Eas$ AsiaEuro"eFS* million5213 731 4682 5152 38889Source: OECD359rodu#$i1e #a"a#i$! (ui)din&9rodu#$i1e #a"a#i$! (ui)din&FS* millionSource: OECD

2468121 22 23 24 25re&iona)>mu)$i*#oun$r!?-I,s@-I,sO@I,s@D,s369rodu#$i1e #a"a#i$! (ui)din& (! donor9rodu#$i1e #a"a#i$! (ui)din& (! donorFS* millionSource: OECD379rodu#$i1e #a"a#i$! (ui)din& (! re&ion9rodu#$i1e #a"a#i$! (ui)din& (! re&ionAfri#aO#eania2ou$h and ,en$ra) Ameri#a2ou$h and ,en$ra) AsiaFar Eas$ AsiaEuro"eFS* million7862 6661 327562 21318Source: OECD382$ru#$ura) ad7us$men$2$ru#$ura) ad7us$men$FS* millionSource: OECD

123456721 22 23 24 25re&iona)>mu)$i*#oun$r!?-I,s@-I,sO@I,s@D,s392$ru#$ura) ad7us$men$ (! donor2$ru#$ura) ad7us$men$ (! donorFS* millionSource: OECD42$ru#$ura) ad7us$men$ (! re&ion2$ru#$ura) ad7us$men$ (! re&ionAfri#aO#eania2ou$h and ,en$ra) Ameri#a2ou$h and ,en$ra) AsiaFar Eas$ AsiaEuro"eFS* million1132 371362124737Source: OECD41ODA is fore#as$ $o in#rease su(s$an$ia))! ODA is fore#as$ $o in#rease su(s$an$ia))! af$er 28 A if donors fo))ow $hrou&h on af$er 28 A if donors fo))ow $hrou&h on 6)enea&)es and 5on& %on& #ommi$men$s6)enea&)es and 5on& %on& #ommi$men$sSource: OECD42Source: OECDThis shou)d (e ref)e#$ed in a s#a)in& This shou)d (e ref)e#$ed in a s#a)in& u" of $he (road Aid for Trade A&endau" of $he (road Aid for Trade A&enda43/ow should Aid for Trade work? /ow should Aid for Trade work? 44On $he On $he Bsu"")! sideCBsu"")! sideC/ donors need $o+/ donors need $o+7rovide additional funding AidforTradeshouldnotdivertresourcesaway from other development priorities, such as health and educationScale up trade expertise and capacity Tradeandgrowthissuesneedtobebetter integrated in donors< aid programmingTrade expertise needs to be strengthened # both in capitals and in#country45On $heOn $he Bdemand sideCBdemand sideC// re#i"ien$ re#i"ien$ #oun$ries#oun$ries need $o+need $o+=ake trade a priority Tradeneedstobeabiggerpartofnational development strategies" Aid for Trade will only work if countries decide that trade is a priorityTake ownership@ountries need to determine their own Aid for Trade plans, involving all stakeholders>ocus on results#oriented 'business plans( AidforTradeisaninvestment,not&ustatransfer" The %uestion is not only how much Aid for Trade is available,butwhetheritiseffectiveandactually benefits developing countries46ToTo (rid&e Bsu"")!C and BdemandC(rid&e Bsu"")!C and BdemandC// (o$h (o$h donors and re#i"ien$s need $o+donors and re#i"ien$s need $o+)mprove cooperationThechallengeofAidforTradeistomarshalthe efforts of many $ and to create the right incentives sothatrecipientsanddonorsworktogethermore effectively )nvolve the private sector )t is businesses, not governments, that trade>inancialresourcesflowingfromincreasedprivate investment and trade easily dwarf government aid47 )mprove transparency and accountability Bestwaytoensurethatpledgesarehonoured, needsaremet,andfinancialassistanceisused effectively, is to shine a brighter spotlight on Aid for shine a brighter spotlight on Aid for TradeTrade48WTCisnotadevelopmentagency$andshouldnot becomeone")tscorefunctionistradeopening,rule making, and dispute settlementButtheWTCdoeshavearole$andaresponsibility$ toensurethatrelevantagenciesandorgani0ations understand the trade needs of WTC =embers and work together more effectively to address themA ro)e for $he DTO+ A ro)e for $he DTO+ moni$orin& and e1a)ua$ionmoni$orin& and e1a)ua$ion49A ro)e for $he DTO+mo(i)i'in&/ A ro)e for $he DTO+mo(i)i'in&/ moni$orin& and e1a)ua$in& aid for $rademoni$orin& and e1a)ua$in& aid for $radeThe WTC is well placed to play this roleirectinterestinensuringthatallitsmembers benefit from trade and WTC agreements=ultilateral,consensus#basedorgani0ationwhere developinganddevelopedcountrieshavee%ual weight)nstitutional experience in reviewing complex policy areas through Trade 7olicy !eview =echanism 5-oni$orin& and e1a)ua$ion -oni$orin& and e1a)ua$ion in $he DTO on $hree )e1e)s+in $he DTO on $hree )e1e)s+ Global levelGlobal level$using data compiled by the CA@#A@Toassesswhetheradditionalresourcesarebeingdelivered,to identify where gaps lie, to highlight where improvements should bemade,toincreasetransparencyonpledgesand disbursements onor levelonor level $ based on self evaluations $ based on self evaluations Tosharebestpracticesacrosscountries,toidentifyareasfor improvementandtoincreasetransparencyonpledgesand commitments@ountry and regional level @ountry and regional level$ based on self assessments $ based on self assessmentsToprovideafocused,on#the#groundperspectiveonwhether needs are being met, resources are being provided, and Aid for Trade is effective51Proposed Architecture of the ,onitoring Proposed Architecture of the ,onitoring -ramewor.-ramewor.,easuring Aid for Trade,onitoring the deliveryand effectiveness of Aid for Trade/st tier0 Glo"al ,onitoring of/st tier0 Glo"al ,onitoring of Trade-related Aid -lows Trade-related Aid -lows& &nd nd tier0 1onors2 self-assessmenttier0 1onors2 self-assessment reportsreports3rd tier0 In-country assessments 3rd tier0 In-country assessmentsA!!#A4 5E6IE7 A!!#A4 5E6IE7522"o$)i&h$ Effe#$2"o$)i&h$ Effe#$Awareness - Information - Incentives7T8 ,onitoring & Evaluation1emand ide419s1eveloping countries5egional Groupsupply ide1onors, 7B, I,-, 8E91,51Bs, #!9TA1,#!1P, #!I18, IT9Private ectorProducers,anufacturerservices,ultinationalsPrioriti:e tradeIncrease resourcesImprove deliveryPrioriti:e trade Ta.e ownershipImplement effectively9ro&ressFeed(a#.9ro&ressFeed(a#.Feed(a#.9ro&ress53Di$h one o(7e#$i1e