Report on the Global Aid for Trade Review and General Council Session
19-21 November 2007, WTO, Centre William Rappard

I. Introduction

1. In December 2006 the Director General of the WTO informed the General Council on his consultations on Aid for Trade (AFT) and described the next steps for moving from the policy debate to the practicalities of implementation. He also stated that the main challenge was to achieve an accurate qualitative and quantitative assessment of AFT. The importance of improving current mechanisms for monitoring and evaluation (M&E) was highlighted by the Task Force created by the Director General of the WTO that provided recommendations to operationalise AFT, as mandated in the Hong Kong Ministerial Conference. As part of its efforts to improve M&E mechanisms, the WTO organised three regional meetings in 2007 for mobilising AFT. The culmination of the AFT process for this year was the Global Aid-for-Trade Review on 19-20 November 2007 and a discussion in the WTO General Council on 21 November 2007.

2. The Global AFT Review had three objectives: i) to take stock of progress to date, including a briefing session on the three regional reviews conducted earlier on this year; ii) to identify future steps, with donors, agencies and partner countries outlining their views/constraints on AFT; and iii) to improve WTO M&E.

3. In accordance with the objectives, the three-day session was divided as follows: i) a technical-level programme, which included a workshop on M&E was held on the first day along with series of breakout simultaneous sessions on cross-cutting issues on AFT, on mainstreaming, regional approaches and public-private partnerships (PPP); and ii) a high level programme, which reviewed progress to date on AFT and laid down future strategies, was held on the second and third day.

II. Technical-level programme

A. Workshop on M&E

4. This workshop was divided into two sessions, one devoted to explore improvements in the “quantitative” measurement of AFT and the other one focused on the “qualitative” aspects of the data.

5. Given the difficulties found on measuring AFT, this session sought to explore, and to eventually agree, on better ways of assessing AFT flows. For this purpose, it is imperative to improve and to clarify not only how additionality is going to be gauged but also how to assess the quality of AFT. On the quantitative side, the focus was on the difficulty of properly grasping what was exactly meant by AFT, and whether to use broad or narrow indicators, i.e. could wider development assistance activities such as education be considered as AFT, as they would certainly have an impact on trade? Or should the focus be solely on trade-related activities? In this context, reference was made to the Creditor Reporting System (CRS) database of the Organisation for Economic Cooperation and Development (OECD), which most participants thought was insufficient to correctly capture AFT flows. However, it was recognised that it made more sense to build upon an existing system rather than creating a new one.

6. On the qualitative aspect, the debate centred on how best to assess the impact of AFT. Among the issues discussed, the most relevant was whether to consider the medium term versus the long term or project versus macro indicators. A number of speakers highlighted that long-term macro indicators were more appropriate to enable measurement of the ultimate objective of AFT, i.e. to improve developing countries’ trade capacity. However, other speakers pointed out the technical difficulty implicit in these indicators, which would also capture external shocks unrelated to trade. In a related note, several participants mentioned that the focus should be on monitoring, and not on evaluation, on the grounds that only when things worked they could eventually have an impact.

7. The session did not reach any concrete outcomes on how to measure AFT. Nevertheless the meeting was useful in fulfilling the objective of identifying the areas of discrepancy that are expected to be further clarified in an expert symposium in spring/summer 2008.

B. Breakout Sessions

8. The afternoon of the first day was devoted to three simultaneous breakout sessions that intended to examine relevant issues in AFT from a cross-cutting perspective. There were three sessions, one on mainstreaming, another on regional approaches and a third one on PPPs.

9. The session on mainstreaming analysed how trade was acquiring more importance in the national development plans/poverty reduction strategy papers (PRSPs) and what were the major impediments for increasing national export capacity. The session highlighted the importance of the PRSPs in guiding trade policy. It also identified the main obstacles to developing and least-developed country (LDC) exports, such as non tariff barriers, in particular sanitary and phitosanitary (SPS) measures and technical barriers to trade (TBT), but also social (and economic) infrastructure. These issues should be tackled in trade policy, which would only be successful if it was implemented with coherence (both intra-country and within the donor community) and ownership was ensured throughout.

10. In the session on regional approaches to AFT, the importance of keeping a regional focus on trade initiatives and to expand this focus to most areas was stressed. Regarding infrastructure, it was recognised that it was poorly developed in the majority of the countries targeted by AFT. Thus, establishing regional networks was crucial for developing export capacity. Rules of origin (RoO) would be greatly simplified and would be easier to meet if they were harmonised regionally. The same applied to standards, customs procedures and trade facilitation. In this context, some countries gave examples on regional financing of projects, such as transport corridors. Participants underscored some challenges that needed to be resolved, as the regional approach was fairly new. Among those, there was the necessity to keep the private sector involved, to scale up official development assistance (ODA), to improve monitoring mechanisms at the regional level and to maintain coherence between national and regional priorities.

11. The session on PPPs was oriented to find avenues to create a more investor-friendly environment in developing countries. It was noted that there was a lack of understanding of what it took to establish a successful PPP. So an effort on capacity building on the public sector to negotiate such PPPs was badly needed. These partnerships could and should target different areas, such as energy, telecommunications and trade facilitation. But also, smaller projects needed to be encouraged through the participation of small and medium-size enterprises (SMEs). It was highlighted that funding the projects was not so much the problem, as there were many companies willing to invest. Rather, there was a need to find alternative ways of mobilising those funds and creating better investment conditions. Last, there was a call to share best practices and obtain lessons from success stories.

III. High-level programme

12. The high-level programme gathered several heads of organisations, such as the WTO, OECD, the World Bank, the International Monetary Fund, the Asian Development Bank (ADB), the Inter-American Development Bank (IADB) and the African Development Bank (AfDB), among others, plus high level officials of bilateral donors, who took stock on progress to date and outlined their vision on AFT for the next years.

A. Examining the results at year one

13. Pascal Lamy, Director General of the WTO, and Angel Gurría, Secretary General of the OECD examined progress to date on AFT and discussed what were the main lessons learnt from the first year of monitoring of AFT.

14. Pascal Lamy emphasised the importance of AFT as a catalyser for boosting the export capacity of a country. However, if AFT was to be successful, the first year of monitoring had shown five common crucial issues: i) leadership; ii) priority setting; iii) thinking regionally; iv) increased and predictable financing; and v) mobilising the private sector. He made clear that, while AFT would help improving supply capacity, it would by no means substitute the positive results of a successful end to the Doha negotiations. He reminded that the WTO was not a development agency, nor it intended to become one, although it was well placed to ensure coherence in M&E. In this respect, he praised the importance of partner and donor self-assessments as a way to monitor AFT. Finally Mr Lamy stressed the need to improve M&E mechanisms.

15. Angel Gurría presented some of the results of the first WTO/OECD Aid-for-Trade at a Glance report, product of the joint WTO/OECD monitoring framework. He first recalled the issue of defining the scope of AFT, clarifying that the view of the report was fairly broad, as it included building productive capacity or economic infrastructure as AFT categories. He announced that average annual aid related to trade provided between 2002 and 2005 amounted to 21 billion US dollars, of which more than half was devoted to economic infrastructure. Figures only went up to 2005, so they did not include progress since the launch of the AFT initiative in Hong Kong. However, the report did provide sufficient basis to establish what areas needed to be improved in M&E. He emphasised the need to track the disbursements and not only the commitments. Similarly, it was crucial to look at results in addition to inputs, and to monitor outcomes at local level. Finally, he recalled that mutual accountability was fundamental to show progress, as only eight partner countries had answered the self-assessment questionnaire.

B. Aid for Trade and the Development Agenda

16. The heads of key international organisations shared the views of their institutions on AFT and announced how they planned to get involved [note 1]. Each of them demonstrated their enthusiasm by participating in this initiative and contributing in areas where they had a comparative advantage.

17. The President of the World Bank declared that it was ready to provide support on M&E, although its main advantage was on implementation. He also used the occasion to announce that the Bank would expand its trade agenda, based on seven points: i) increase country programmes on trade; ii) provide more resources for infrastructure; iii) expand their trade-finance services; iv) increase support for trade facilitation; v) improve training assistance on specific areas; vi) develop indicators for trade and competitiveness; and vii) strengthen trade-development knowledge.

18. The IMF Managing Director stated that export and growth policies had to work hand in hand and praised the pertinence of the Enhanced Integrated Framework (EIF) that combined both. The IMF could contribute in those areas that would support building a growth-oriented environment and would stimulate trade, such as tax and customs reform and trade financing. The United Nations Development Programme (UNDP) Administrator shared the importance given to the EIF, as it placed trade at the centre of national development plans. He recalled that inter-organisational cooperation needed to be reinforced, and that organisations, such as the World Health Organization (WHO) or the United Nations Environment Programme (UNEP), could provide key inputs in their own fields of expertise. The three regional banks (IADB, AfDB and ADB) highlighted the importance of regional integration as a means to develop trade and to expand regional initiatives, in different areas such as infrastructure. Also noticeable was the different perspective given by the Secretary General of UNCTAD, who said that in the absence of AFT, the Doha Work Programme could bring about net losses for some poor countries. He said that while the emphasis should be given to LDCs, non-LDCs (IDA-only countries) should also continue to receive aid on trade matters, so programmes such as the Joint Integrated Technical Assistance Programme (JITAP) should continue.

C. The Way Forward and Future Plans

19. Three regional sessions took place between the afternoon of the second day and the morning of the third day with a view to bring together and indicate future steps of the key partners in each of the three main regions: Latin America and the Caribbean, Asia-Pacific and Africa.

20. The session on Latin America and the Caribbean expressed concerns about the insufficient attention the region attracted as an aid recipient, with only seven per cent of total ODA devoted to it, and some participants called for the creation of a regional task force that would assist in attracting funds. Speakers also underscored the importance of regional programmes, with a particular stress on SPS and infrastructure. However, it was important to look at individual countries, as the region was composed of many different realities, going from landlocked developing countries (LLDCs) to relatively industrialised powers. These differences meant that some of the countries in the region (Argentina, Brazil and Mexico) could participate in AFT also as donors, providing mostly technical assistance. Similar concerns were raised in the session on Asia-Pacific. Participants recalled that although Asia was home to a number of recent success stories, there were many countries still facing severe hardships, mostly the numerous LLDCs and small-island developing states (SIDS), which had very deficient infrastructure.

21. In the session on Africa, the speakers agreed that the continent’s main problem was the high cost of doing business, as a result of the many existing hurdles like inadequate infrastructure and lack of human and financial resources. AFT should serve to tackle these difficulties. One of the main shortcomings was the weak and disorganised private sector. Thus, there was an urgent need to strengthen private sector capacity. In parallel, PPPs should be encouraged at all stages. Both private and public sectors needed to better understand the potential benefits of AFT. Participants expressed the necessity to raise awareness in such a way that the coherence of the process could be ensured. As in the other sessions, the importance of keeping a regional approach was also highlighted. Finally, it was crucial to constantly report on progress for which it was suggested to have a stock-taking meeting in the autumn of 2008.

D. Looking Ahead – General Council Debate on Aid for Trade

22. The last part of the Review was devoted to a discussion in the General Council, where WTO members and observers had the opportunity to express their views, plans and demands on AFT [note 2].

23. In general, the importance of AFT was emphasised. Members and observers geared their declarations according to their own specificities. Donor countries spelled out their more significant trade projects and the amounts they had committed or disbursed. Most countries announced an increase in the trade component of their aid and called for a successful end of the Doha negotiations. Among the specific commitments made by countries, New Zealand’s decision to commence support to AITIC should be highlighted. Some non-traditional AFT donors like Spain conveyed their drive in favour of AFT financing. Partner countries focused their interventions on expressing the particular areas in which they mostly needed AFT, with infrastructure attracting most of the demands, while repeating the need to increase and better predict financing and to ensure country ownership. A number of larger developing countries, such as China, Saudi Arabia and Turkey announced that they also had in place trade-related assistance programmes, mostly directed towards least-developed countries. Also, many developing countries used the occasion to announce that they had already taken some steps to mainstream trade in their national development strategies. Most partner countries also related AFT to the Doha negotiations, reiterating the calls for better market access and greater flexibilities, as they have already done during the negotiating process. Also importantly, AITIC was publicly thanked by the representatives of Lesotho, on behalf of the LDCs, Paraguay, on behalf of LLDCs, Qatar, on behalf of a number of Arab delegations [note 3], Antigua and Barbuda, Cambodia, Honduras, Mongolia and Suriname.

IV. Conclusion

24. The Global AFT Review demonstrated that AFT has definitely gained momentum and that virtually every stakeholder wants to be on-board. Developed countries and agencies will increase their support to trade-related activities while developing countries are, for the sake of ensuring ownership, keener than ever in giving trade a higher importance in their national agendas.

25. In terms of M&E, the conference served to identify the areas of discrepancy, which for the most part related to the definition of AFT, to give greater emphasis to country monitoring, to capture the regional dimension of Aid for Trade, and to expand the scope of the donor - and partner- country self-assessments. Similarly, future indicators will start looking not only at flows but also at results, as this is the ultimate purpose of AFT. Most of these issues are still outstanding and they will be studied more in depth in an Expert Symposium before Summer 2008.

List of Acronyms

Note 1: The heads of the World Bank, IMF, United Nations Development Programme (UNDP), IADB, AfDB and ADB were part of the panellists; the heads of the International Labour Organization (ILO), United Nations Conference on Trade and Development (UNCTAD), Universal Postal Union (UPU) and the International Islamic Trade Finance Corporation (ITFC) also provided additional inputs. (return to text)

Note 2: A number of bilateral donors had already made public statements the previous day; for simplicity, they are all included in this section, as the nature of the statements was essentially the same. (return to text)

Note 3: Gulf Cooperation Council (GCC), which include Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates, in addition to Jordan, Lebanon and Yemen. (return to text)