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Development Account Projects

Facilitating effective integration of developing countries in the global economy through aid for trade schemes

Background:

The international community rightly expects that if trade could play its role as envisaged in Millennium Development Goal 8, there would be positive synergy with Millennium Development Goal 1, which aims at reducing the absolute number of people faced with hunger and poverty. In this respect, several global initiatives have been started which aim at helping developing countries better integrate into the global economy through trade. Among these initiatives, the Aid for Trade was launched in the context of the multilateral trade negotiations in December 2005. As an innovation, the Aid for Trade initiative was conceived not only to mainstream trade into the broader national development strategies of the beneficiary countries but also to deal with broad trade-related constraints ranging from trade policy and regulations to hard infrastructure for trade. Aid for Trade will also ensure country ownership, and help to improve the absorptive capacity of beneficiary countries by assisting them in the development of appropriate Aid for Trade project proposals and effective implementation mechanisms.

In 2007, the international community undertook the first global review of the Aid for Trade. The global review was supplemented by regional reviews that were carried out in Latin America, Asia and Africa. These reviews were jointly organized by the World Trade Organization, regional development banks and United Nations regional commissions. However, these reviews have not covered the low- and middle-income countries from Central and Western Asia nor economies in transition in Europe. In addition, some regional commissions were not associated with the process although they have an important role to play in the formulation and coordination of regional development strategies. In the regions where the reviews took place the priority areas were identified where Aid for Trade could have a positive impact and enable their economies to benefit from trade. Several critical issues emerged from the global Aid for Trade review, which must be addressed in order to ensure that the initiative could lead to the expected results which would help specifically ensure that developing countries, countries with economies in transition, and the least developed countries benefit from trade.

 

The key issue is clear development priorities and action plans, which were found absent in most countries of the regions where the global review took place. The regional dimension of the Aid for Trade requires that countries present priorities and action plans that take account of transboundary trade needs. Coordination at the regional level using the existing regional institutions is also important. Furthermore, Aid for Trade needs should be driven by a strong participation of the private sector, civil society and non-governmental organizations as agreed during the November 2007 global review that had taken place at the World Trade Organization.

The project endeavours to focus on three critical issues where the regional commissions play an important role: ensuring that the Aid for Trade initiative is inclusive; sharing knowledge and information on how the different regions are implementing and monitoring Aid for Trade; and developing global consensus on the identification of indicators that can be used to monitor Aid for Trade.

Objective:

To strengthen the capacity of developing countries and countries with economies in transition to formulate and implement programmes and projects in the area of Aid for Trade at the national and regional levels.

Expected accomplishments:

  • Enhanced understanding by policymakers and other stakeholders of the Aid for Trade initiative and its impact on growth and development in order to implement and formulate project strategies to benefit from the initiative.
  • Enhanced technical capacity and skills to formulate and implement Aid for Trade-related projects and programmes at the national, subregional and regional levels.

Implementation status:

In progress.