What is Aid for Trade?
As more developing countries have liberalized their markets and entered into global trade, it has become clear that liberalization and trade agreements alone do not necessarily lead to increased trade and improved economic outcomes, particularly for small and remote communities. Developing countries face supply-side constraints that limit their ability to benefit from trade, and this effect is magnified in the case of small island economies like those in the Pacific.
Aid for trade refers to a subset of development assistance that aims to help developing countries address and overcome constraints to increased international trade in both goods and services. As such, Aid for Trade covers a range of activities that boost a country’s capacity to create and take advantage of expanded trade opportunities.
There are two main categories of Aid for Trade that are supported by the Forum Secretariat’s Economic Governance Programme. These are:
- Trade policy and regulations to help countries negotiate, reform and prepare for closer integration in the multilateral trading system. This covers activities such as analysis and implementation of multilateral trade agreements, trade policy mainstreaming and technical standards, trade facilitation including tariff structures and customs regimes, support to regional trade arrangements and human resources development in trade; and
- Trade development to help enterprises engage in trade and improve the business climate, access to trade finance and trade promotion in the productive sectors such as agriculture, forestry, fishing, industry, mining, tourism and services including labour.
Aid for Trade can also include the financing and development of infrastructure for trade, such as airports, ports and telecommunications services, and support for trade-related adjustment measures.
The 2005 Hong Kong WTO Ministerial Declaration called for the expansion and improvement of Aid for Trade and set in motion a process to achieve this: the Aid-for-Trade Initiative. A WTO Task Force on Aid for Trade was set up in 2006 and work have been undertaken by the WTO and the OECD to define, measure and report on Aid for Trade. This has included the development of monitoring frameworks, annual reporting of Aid for Trade programmes and policy by OECD members and developing country partners, and a range of analytic work to develop guidance to improve the effectiveness and accountability of Aid for Trade.
What is the Pacific Aid for Trade Strategy?
The Pacific Aid for Trade Strategy was developed and endorsed by Pacific ACP Trade Ministers in 2009 to help Forum island countries coordinate and strategically utilize regional Aid for Trade funding. The Pacific Aid for Trade Strategy is driven by the Pacific Plan for Strengthening Regional Cooperation and Integration. The Strategy addresses the trade-related needs of the FICs within the framework of four strategic goals:
(i) creating trade policy and regulatory environments conducive to achieving sustainable economic growth;
(ii) addressing supply-side constraints through strengthening private sector capacity;
(iii) improving infrastructure in a way that improves trade integration and development; and
(iv) integration into regional and global markets through macroeconomic adjustment measures.
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The Strategy is supported by the Pacific Aid for Trade Roundtable, which provides an avenue to coordinate the prioritization and assessment of regional Aid for Trade programs and facilitates consultation and coordination between Forum island countries, development partners and multilateral institutions.
At the direction of Forum island country members of the Pacific Aid for Trade Roundtable, a renew and refresh process has commenced to update and strengthen the Pacific Aid for Trade Strategy. This process will be undertaken during 2011 and will include extensive consultation with regional stakeholders.