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Aid for Trade

WTO members launched the Aid for Trade initiative at the Sixth Ministerial Conference in Hong Kong in 2005. Aid for trade focuses on supporting developing countries, particularly the least-developed, in building trade capacity, enhancing their infrastructure and improving their ability to benefit from trade opening opportunities.

Aid for trade financing

Figures from the Organization for Economic Cooperation and Development (OECD) show that overall disbursements under the Aid for Trade Initiative reached US$ 42.4 billion in 2014, the highest for a single year. However, total commitments fell by US$ 1 billion to US$ 54.5 billion between 2013 and 2014, the latest year for which figures are available. Support for energy generation and productive capacity building in developing countries continued to attract increased levels of funding, as did aid commitments for private sector development. But commitments for trade facilitation programmes fell from US$ 613 million in 2013 to US$ 362 million in 2014, according to OECD data. Total disbursements of Aid for Trade since 2005 stand at more than US$308 billion in official development aid and a further US$208 billion in other official flows (development finance provided to developing countries but not at rates considered official development assistance).

The figures for least-developed countries (LDCs) were US$ 18.4 billion and US$ 14.4 billion, respectively.  Disbursements to LDCs also slowed, albeit more gradually, dropping US$ 0.4 billion to US$ 10.5 billion in 2014.

Promoting connectivity work programme

A key message from the Fifth Global Review of Aid for Trade in 2015 was that high trade costs, including tariffs, transport, exchange rate and regulatory costs, create a substantial barrier to developing countries connecting to global and regional markets – with LDCs, small and vulnerable economies (SVEs) and landlocked developing countries the most affected. To respond to this challenge, the 2016-17 Aid-for-Trade work programme – promoting connectivity – aims to help developing countries connect to trade so that they fully exploit their potential. The programme, which was launched in February 2016, will build on insights generated by the Fifth Global Review of Aid for Trade in 2015, which examined trade costs. Promoting connectivity will be the theme of the Sixth Global Review, scheduled for 11-13 July 2017. With an increased focus on services trade, the Aid-for-Trade work programme will deepen analysis of how high trade costs inhibit the integration of developing countries into global value chains and restrict their economic development. Activities will focus on gender and women’s empowerment, upgrading infrastructure for developing countries, e commerce, digital trade, and micro, small and medium-sized enterprises (MSMEs). These activities will culminate in the Sixth Global Review. Work programmes promote deeper coherence among aid-for-trade partners and help the trade and development community to focus on aid for trade, with the emphasis on showing results.

Monitoring and evaluation

WTO Director-General Roberto Azevêdo and OECD Secretary-General Angel Gurría (OECD) launched the 2016 monitoring and evaluation exercise (M&E) on 27 July 2016. Its aim is to survey aid-for-trade priorities and how these have changed; the status of Trade Facilitation Agreement (TFA) implementation and support; engagement in, and support to, the development of e-commerce; and infrastructure investment, the development of related services markets and related investment climate reforms. One cross-cutting theme that will be examined by the M&E exercise is how aid-for-trade support is contributing to the achievement of the SDGs, notably the targets on poverty eradication and women's economic empowerment. By 31 December 2016, 101 WTO members and observers had taken part in the exercise. Over 108 questionnaires and 142 case stories had been received from partner countries, south-south partners, regional economic communities and transport corridors, and donors. The exercise also attracted the participation of the private sector, academia and civil society. The information collected will be analysed for the next Aid for Trade "At a Glance" publication, issued jointly with the OECD, which will be launched at the 2017 Global Review. The review will highlight the main constraints standing in the way of using connectivity (both digital and physical) for sustainable development and trade growth.

The Enhanced Integrated Framework (EIF) for LDCs

The EIF is the only global Aid for Trade programme dedicated to addressing the trade capacity needs of all the LDCs. Based on a partnership amongst LDCs, Donors and eight International Agencies, the EIF provides a global framework for the development community to coordinate and deliver its Aid for Trade to all the LDCs. It does this by supporting the LDCs to identify, prioritize and address their most important binding trade related constraints, in a way that ensures that trade is used to directly support inclusive growth, poverty reduction and sustainable development. This is undertaken by providing a combination of technical and financial support, involving institutional and policy capacity building, followed by catalytic funding, which is used to leverage additional resources to address select priority constraints to trade. This is underpinned by country ownership, a partnership approach and ensuring a long lasting sustainable impact. The EIF directly supports development cooperation principles by promoting enhanced coordination, efficiency and effectiveness in the delivery of Aid for Trade to the LDCs. Corresponding well with the timing of the agreement of the Addis Ababa Action Agenda, EIF Phase Two started in January 2016. So far, 15 Donors have pledged close to US$90 million for the EIF Phase Two multi donor trust fund, which is one third of the required budget (US$274 million) for the full duration of the programme (2016-2022). A resource mobilization strategy is currently being implemented, which includes a replenishment conference that will take place towards the end of 2018 to mobilize additional funding for the EIF Trust Fund. At the country level, the EIF provides a common basis for development partners to provide funding to address all priority needs. Given the catalytic nature of the EIF programme, coupled with limited resources available in the EIF Trust Fund, not all priority needs can be funded through the multi-donor EIF Trust Fund. As a part of its results framework for EIF Phase Two, this level of resource mobilization is also being monitored by the EIF.