Wednesday, July 20, 2011

Third global review of Aid for Trade

The WTO release third global review of Aid for Trade (AfT). The report basically details the increase in AfT, its ‘effectiveness’ in Cape Verde (graduated from LDC club in 2008), Rwanda (top performer in Doing Business ranking), and the role of EIF in mainstreaming trade at national level and utilizing AfT. AfT assists developing countries to increase exports of goods and services, to integrate into the multilateral trading system, and to benefit from liberalized trade and increased market access. The assumption is that effective Aid for Trade will enhance growth prospects and reduce poverty, as well as complement multilateral trade reforms and distribute the global benefits more equitably across and within developing countries.

The main highlights:

  • In 2009, aid-for-trade commitments reached approximately USD 40 billion, a 60% increase from the 2002-05 baseline. Other official flows to trade-related sectors doubled to reach USD 51 billion. Half of all aid for trade is provided in grant form, mainly to the poorest developing countries. 
  • Disbursements have been growing steadily at 11-12% for each year since 2006 - reaching USD 29 billion in 2009 - indicating that past commitments are being met.
  • Aid for trade to sub-Saharan Africa increased by 40% to reach USD 13 billion and Africa now receives the largest share among the different regions.
  • The outlook for aid for trade is stable: last year in Seoul, South Korea, G20 leaders committed to at least maintain, beyond 2011, aid-for-trade levels reached over the years 2006-08. But some OECD countries are confronted with large budget deficits and find it difficult to respond adequately to the higher demand for aid for trade. Fortunately, there are positive signs that South-South co-operation continues to grow.

The wholly positive outlook of this report is not totally consistent with the five country study on the effectiveness of AfT carried out by SAWTEE and ICTSD. The country reports are forthcoming. I write a blog later on comparing this report with the country reports, which is more exhaustive and rigorous than the WTO report.