Magazine article International Trade Forum

Aid for Trade: A Wider Scope

Magazine article International Trade Forum

Aid for Trade: A Wider Scope

Article excerpt

Interview with Ambassador Mia Horn af Rantzien, Chair, WTO Aid for Trade Task Force

Go beyond trade policy when addressing what you need to improve your country's trade performance, recommends the Aid for Trade Task Force.

Q Is Aid for Trade worth it for developing countries?

A From the development standpoint - which is my background - Aid for Trade is essential. For some countries, market access is not enough; they need parallel support. An important achievement of the Task Force is that the international community now accepts that some countries cannot be real actors on the trade scene if they do not have roads to take goods to ports, laboratories and so forth.

There may be short-term costs to opening up trade under WTO rules, too. Studies show that a few countries risk becoming short-term net losers, without help to adjust to open markets and new rules.

Q Is there a shift in thinking about Aid for Trade?

A Task Force discussions have helped to raise awareness and connect decision-makers in different circles. There is growing insight in development circles that trade could be a very important tool for development, and that donors and international agencies must do more to link development aid to trade. Here, ITC has a lot of experience. Apart from funding education or health, development agencies must invest in building productive capacity. Trade bodies are now more aware that some countries need help to exploit opportunities and implement commitments.

Aid for Trade is a way to link policy decisions in trade and development, increasing the potential development outcome - a true example of the benefit of increased coherence. We need a wider mindset about it. The focus used to be on trade policy support. It's now understood that supply-side capacity, infrastructure and adjustment issues are equally important.

Q How much money Is available for Aid for Trade?

A In Hong Kong [WTO Ministerial Conference, December 2005], Japan announced development assistance spending on trade, production and distribution infrastructure of $10 billion over three years, the United States announced Aid for Trade grants of $2.7 billion a year by 2010, and the European Union and its member states announced trade-related development assistance spending of euro2 billion per year by 2010. As I understand it, they reconfirmed these pledges in consultations with Pascal Lamy.

I believe there is a true willingness to increase funding for aid for trade, but it must be based on demand. More money, in isolation, won't work. Spending must be country owned, reflecting the insights of national stakeholders.

Q What is the scope of Aid for Trade? …

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