4. Frequently Asked Questions

This section describes pending issues and seeks to provide preliminary answers to some of the outstanding questions regarding the implementation of the EIF.

1. Which countries are eligible for the EIF?

Assistance under the EIF will remain restricted to the LDCs. Initial suggestions on extending coverage to other low-income countries did not garner support. However, the Task Force on Aid for Trade has recognised the need to support non- LDCs in trade mainstreaming, needs assessment and in accessing funding for assistance projects.

2. What is the time frame for implementation of the EIF?

The initial deadline for making the EIF operational was 31 December 2006. However, the Transition Team required additional time for translating the general tone of the recommendations into specific follow-up measures and addressing some of the administrative and legal matters. The “old” IF Working Group is dissolving to let its successor, the IF Board, take up work on transition issues in May 2007, which includes setting a date for the EIF to become operational. Funding for at least a two-year period seems secured according to donor indications. A funding cycle of five years for the EIF is envisaged.

3. How much funding will be made available and through which channels?

The Task Force has proposed to step up official development assistance (ODA) dedicated to the EIF to an order of USD200-400 million for a five-year budgetary cycle. Cost estimations annexed to the recommendations project expenses of around USD400 million. It is aimed to raise approximately USD 250million as contribution to the multilateral IF Trust Fund while approximately USD150 million will come as project-specific support through bilateral channels. Four donor consultations took place in Brussels (December 2006), Paris (March 2007) and Geneva (May 2007). Efforts are under way to recruit new “non-traditional” donors, for example emerging developing countries with a strong interest in boosting the trade capacities of their trade partners. A donor conference planned for June 2007 will aim to secure binding funding commitments.

4. What activities will be funded through the EIF?

The EIF will consist of two tiers:

Tier 1 will finance human resource capacity-building and support for preparing and updating Diagnostic Trade Integration Studies (DTIS); provide support to the National Implementation Unit (NIU) and other implementing institutions, which includes small capital equipment such as computers; and provide assistance in integrating trade into national development plans. Projects under this Tier will be screened and approved by a Tier 1 Advisory Committee composed of the NFP, the Donor Facilitator and members of the NSC.

Tier 2 will cover activities emerging from priorities set out in the Action Matrices. It would fund project preparation, feasibility studies and small-scale projects. Tier 2 activities will include assistance in complying with WTO or other trade policy commitments; preparatory support for infrastructure project implementation; harmonisation of Action Matrices with national development plans and undertaking cost-benefit analyses in the process of project design and implementation; further assistance to the NIU and other EIF institutions; assistance in developing national trade plans and sectoral programmes; support for project design for programming processes, such as World Bank Consultative Group and UNDP Round Table meetings; and independent implementation of small projects identified in Action Matrices. Tier 2 projects will be screened by a Tier 2 Advisory Committee and approved by the IF Board.

The EIF is expected to function as a catalyst in mobilising resources for larger-scale programmes emerging from the priorities of the Action Matrices and as a mechanism for coherence and coordination in addressing trade capacity needs.

5. How will EIF resources be disbursed?

EIF finance will be released by the IF Trust Fund. It has not yet been decided which institution will manage the Trust Fund. The Financial Cluster of the Transition Team has prepared terms of reference for the management of the Trust Fund and a tendering process will be launched soon.

6. What will be done to improve coherence under the EIF?

The Task Force foresees strengthening the IF governance structure. The EIF will be managed by a new Executive Secretariat, headed by an Executive Director. Administratively housed by the WTO, the Executive Secretariat will be independent from the IF agencies and have a large number of responsibilities. It will provide support to implementation of IF projects in liaison with the in-country based National Focal Point (NFP). It will receive policy guidance from the new IF Board, the successor of the IF Working Group. The IF Steering Committee (IFSC) will continue reviewing progress through annual reports from the Executive Secretariat and serve as a forum for an exchange of experiences. Participation in the IFSC is open to all WTO members.

At the in-country level, a number of coordinating mechanisms and institutions will work towards a coherent implementation of trade-related projects. The National Steering Committee (NSC), comprised of senior officials and civil society and private sector representatives, will oversee IF operations. The NFP, a senior government official nominated by the NSC, will be in the centre of in-country implementation. The NFP can appoint a National Implementation Unit (NIU) to provide support. Moreover, the NFP will liaise with an inter-ministerial committee, which will under the leadership of one Minister coordinate the key ministries involved (i.e. Trade, Finance and Planning). The Task Force has also recommended setting up a stakeholder process facilitating the participation of stakeholders from civil society and the private sector. A local donor facilitator will be responsible for coordinating funding activities.

Instilling more coherence into the process will require a clear division of responsibilities between the implementation units and the newly created IF organs. The mandate of some of the in-country units still require some clarification and may need to be adjusted throughout the process. Also the different agendas, working methods and objectives of the IF agencies and the bilateral donors, will continue to pose a significant challenge.

7. How will the EIF achieve stronger country ownership?

Lack of country ownership was one of the main obstacles to the effective implementation of the IF. According to the Task Force, this was primarily due to weak capacity in trade mainstreaming and insufficient coordination and cooperation between government ministries and stakeholders. Tier 1 project activities are designed to address capacity constraints. Support to the implementing institutions is also foreseen under this Tier, which could include coordination assistance. Projects under this Tier will be approved at the in-country level, that is by the Tier 1 Advisory Committee. However, less clear is what will be done to keep other stakeholders on board, for example what functions will be performed through the stakeholder process. Country case studies of success stories of IF implementation could be used to establish best practices.

8. What is foreseen for EIF monitoring and evaluation?

The new IF Executive Secretariat will be responsible for monitoring and evaluation of IF project implementation. This will require extensive and constant exchanges with the in-country implementation units and the IF agencies on the ground. The IF Steering Committee will examine in-country case studies of IF implementation to foster exchange of experiences. Recourse will be made to the OECD’s Development Assistance Committee (DAC) and Creditor Reporting System (CRS) databases for recording fund flows. The Task Force also recommended the appointment of an independent auditor, a point which will be addressed by the IF Board in setting up the overall framework for IF monitoring and evaluation.

9. What Happens Next?

Governance: The IF Board will be convened in May 2007 to address outstanding technical issues and determine a date for launching the EIF. It will start a recruitment process for the Executive Director and staff of the IF Executive Secretariat as well as initiate the selection process for the IF Trust Fund manager. While terms of reference for the Steering Committee, the IF Board , the Trust Fund manager and the Executive Director , are in place, more precision is needed regarding the relations between the other IF institutions. In particular the relationship between the IF Trust Fund manager and the IF Board requires clarification, which may affect disbursement modalities. Also, the accountability mechanisms between the Trust Fund manager and the Geneva and in-country governance structures (i.e. IF Board , NSCs and NFPs) need to be refined.

Monitoring and Evaluation: The IF Board will continue work on a monitoring and evaluation framework for the EIF. This includes appointing an independent auditor. The principles of the Paris Declaration on Aid Effectiveness need to be translated into workable monitoring and evaluation processes at the in-country level.

Fundraising: A high-level meeting of donors in June 2007 will aim to secure binding commitments to the EIF.

Moreover, exploratory missions to some LDCs are planned for spring/early summer 2007. Two regional workshops on the EIF will be held in Africa (one for French-speaking, one for English-speaking countries) and in autumn 2007, a conference for NFPs in Geneva will take stock of progress made and brainstorm on outstanding tasks.

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