8. Aid for Trade Glossary

Additionality

The term “additionality” refers to a commitment made by donors at the G7 and G8 meetings in 2005 to ensure that Aid for Trade is additional or supplementary to other development aid rather than merely a substitute or a repackaging of any current aid. Donor countries targeted year 2010 to achieve additionality. The Task Force included this objective in its recommendations released in July 2006. At the AFT Global Review in November 2007, a number of donors confirmed their pledges, but no new pledges were made. In spite of the OECD’s efforts towards assessing additionality through the Creditor Reporting System, it has proved difficult until today to provide a clear-cut diagnosis.

Aid for Trade Advisory Group (or ad hoc Consultative Group)

Bilateral Aid

Official aid and official development assistance (ODA) delivered by a donor country government to more than 100 developing countries and transition economies as listed by the Development Assistance Committee (DAC). Resources are channelled via the development ministry, associated agencies or other institutions working with recipient countries, mostly based in the donor country.

Budgetary Assistance or Budget Support

Funds supporting government programmes, aimed at fostering economic growth and poverty reduction and enhancing relevant institutions or funds made available that are administered by the recipient government through its financial management systems.

Coherence

Commitment

An obligation taken by a donor government to deliver assistance to a recipient country or a multilateral organisation.

Country ownership

Creditor Reporting System (CRS)

OECD database capturing aid flows that will be used for monitoring Aid for Trade along with the database of the Development Assistance Committee (DAC). The CRS has data on donors, geographical areas and sectors targeted by aid. It also provides information on aid policy issues.

Development Assistance Committee (DAC)

Forum at the Organisation for Economic Co-operation and Development (OECD) among 22 donor countries and the European Commission. At the DAC, members consult on aid delivery methods and ways to raise aid flows and ensure effectiveness. Members are: Australia, Austria, Belgium, Canada, Denmark, European Commission, Finland, France, Germany, Greece, Ireland, Italy, Japan, Luxembourg, Netherlands, New Zealand, Norway, Portugal, Spain, Sweden, Switzerland, UK and United States.

Disbursement

Transfer of funds, goods or services to the recipient country. Disbursements are expressed in the costs incurred by the donor.

Doha Development Agenda Trade Capacity Building Database (TCBDB)

Joint WTO/OECD database on national and regional trade-related technical assistance and capacity-building projects. Data provides information on trade category (trade policy and regulations, trade development or infrastructure), recipient country or donor.

Export-led Poverty Reduction Programme

Technical assistance programme launched by the International Trade Centre (ITC) in 2002. It seeks to create employment and raise incomes of disadvantaged communities by improving export opportunities. Activities include identification of exportable goods and services produced by the poor, reinforcing production and marketing skills through training, and providing institutional support aimed at strengthening linkages with markets abroad.

Geneva Consultation Process

Institutional Development

Technical assistance and capacity-building for official agencies or government departments. Measures include strengthening human resources for policy implementation, establishing new administrative and financial management systems (e.g. using information technology) and supporting policy implementation, for example by facilitating access to information or data collection for monitoring purposes.

Investment promotion

Measures aimed at improving conditions for attracting capital inflows. This can include strengthening regulatory and legal frameworks, advice on investment-friendly fiscal policy, facilitating access to financial services, building promotional skills and disseminating information on investment opportunities.

Low-income countries

A World Bank category of countries with a gross national income (GNI) per capita below US$875.

Lower-middle income countries

A World Bank category of countries with a gross national income (GNI) per capita between US$876 and US$3,465.

Market development

Activities promoting access to new markets for products and services by linking producers/processors to buyers.

Monitoring and evaluation

Monitoring and evaluation are key aspects to make the Aid for Trade initiative operational, as mandated by the Task Force Recommendations of July 2006. The WTO Director General was requested to set up a mechanism to ensure effective monitoring and evaluation of Aid for Trade, with the WTO at the centre of the architecture. A three-tier monitoring is in the course of implementation: global monitoring (national and regional reviews as well as statistical input on assistance provided) by the OECD and self-assessments questionnaires from both donors and recipients.

Official Aid

Measures meeting official development assistance (ODA) criteria extended to countries that are not on the DAC’s list of countries eligible for ODA. Since 2005, the DAC has ceased to record official aid flows.

Official Development Assistance (ODA)

Financial flows from state entities to multilateral institutions and eligible countries as per the DAC list. ODA comprises grants and loans at concessional rates with the objective of promoting economic development and welfare in the recipient countries.

Link to DAC list of ODA recipients for 2005, 2006 and 2007: http://www.oecd.org/dataoecd/23/34/37954893.pdf.

Poverty Reduction Strategy Papers (PRSP)

Nationally-owned” country strategies (including economic and social policies and programmes) to promote growth and reduce poverty. It was agreed at the Bretton Woods institutions’ 1999 Annual Meetings that the PRSP should provide the basis for the World Bank and IMF concessional lending and debt relief.

Sector approach

Donor funding targeting a single sector policy and expenditure programme in the form of technical assistance, project or budget support.

Standards and Trade Development Facility (STDF)

Technical assistance and capacity-building programme on trade and sanitary and phytosanitary (SPS). The STDF coordinates and finances activities supporting developing countries in complying with SPS standards and thereby improve human, animal and plant health as well as market access for their products. It is implemented by the Food and Agriculture Organization (FAO), the World Organization for Animal Health (OIE), the World Bank, the World Health Organization (WHO) and the World Trade Organization (WTO).

The categories of Aid for Trade

Trade policy and regulations
This type of support aims to help countries reform and prepare for closer integration in the multilateral trading system. It includes various activities: “training of trade officials, analysis of proposals and positions and their impact, support for national stakeholders to articulate commercial interest and identify trade-offs, dispute issues, institutional and technical support to facilitate implementation of trade agreements and to adapt to and comply with rules and standards”. This category is part of the former Trade Capacity Building Database and will be incorporated into the Creditor Reporting System (CRS).

Trade development
This type of support will help enterprises to trade and create a favourable business climate. It includes various activities: “investment promotion, analysis and institutional support for trade in services, business support services and institutions, public-private sector networking, e-commerce, trade finance, trade promotion, market analysis and development”. Trade development as measured in the Trade Capacity Building Database will be incorporated into the CRS.

Productive capacity building
This type of support seeks to strengthen economic sectors in order to increase competitiveness in export markets. This category will be matched in the CRS with a new aggregate subsuming a number of existing subcategories. It should be noted that trade development was part of productive capacity building in the CRS until 2008.

Trade-related infrastructure
This type of support aims to help countries build the physical infrastructure to transport goods, persons and to export. It includes physical infrastructure with a direct role in fostering trade (e.g. construction of a road linking industrial areas to the harbour in order to ship merchandises abroad). This category will be approximated in the CRS with “economic infrastructure”. Selected donors (i.e. EC, US, World Bank) have announced that they will create a new category to report on this type of support.

Trade-related adjustment
Such financial assistance will aim to meet adjustment costs from trade policy reform, including balance of payment problems resulting from lost tariff revenues or from the erosion of preferential market access . It will be measured from 2008 as a new subset of Trade policy and regulations.

Other trade-related needs
It refers to the trade-related component of aid in other sectors not comprised in the five above-mentioned categories, e.g. health and education. Its measurement is not feasible in the CRS as it is.

Trade Integration Mechanism (TIM)

Created by the IMF in 2004, a mechanism facilitating more predictable access to IMF loans to countries with balance of payments shortfalls resulting from multilateral trade liberalization.

Upper-middle income countries

A World Bank category of countries with a gross national income (GNI) per capita between US$3,466 and 10,725.

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