Thursday, January 5, 2012

Evaluating Aid for Trade on the Ground: Lessons from Nepal

Here is an abstract of a latest paper I co-authored.

The paper assesses the effectiveness of the AfT initiative in Nepal. It demonstrates that AfT has played a role in enhancing the country’s export performance. Notably, AfT-supported capacity building programmes have, in some cases, improved the competitiveness of Nepali exporters and promoted small-scale industries for products such as tea, cardamom and ginger. However, the potential effectiveness of AfT in Nepal is also hampered by various factors, such as low absorptive capacity; limited progress in making AfT projects financially and institutionally sustainable; and the need for more ownership by government agencies and the private sector. Finally, building on the study’s findings, the paper provides concrete recommendations to assist Nepal in making AfT programmes more effective in achieving their trade and development goals.

Read the full paper here (alternative link here).

8th WTO Ministerial: Where’s the “early harvest”?

In his opening address during the 8th Ministerial Conference in Geneva on December 15, 2011, the WTO Director-General Pascal Lamy called on members to “stand up for the values of multilateralism” and for major players to “exercise leadership and to muster political courage to act together for greater trade opening and reform.” Furthermore, he urged them to place the interests and needs of developing countries and, in particular, those of the poorest, at its heart. However, the wishes of Lamy were not fully reflected in the final outcome of the conference.

To avert tension over format of text and agenda to be agreed upon, there was no Ministerial declaration on December 17. Members made their individual statements during the sessions and the Chairman of the conference presented his own statement at the end of the session. Meantime, as a LDC chair, Nepal underscored the need for full, effective and immediate implementation of the Istanbul Programme of Action on LDCs.

The formal and informal meetings during the conference were a disappointment on two fronts. First, they failed to agree on how to conclude the Doha talks launched in 2001. While all countries said they were committed to taking Doha agenda to a logical conclusion, the major players stated this with some reservations. For instance, the US wanted emerging developing countries to further open up their markets, but the latter were disinclined to agree to that. The major players with substantial interests on Doha agenda initially proposed talks to continue based on plurilateral basis, i.e. it would involve only those members that are willing. But, this ran counter to the WTO’s foundation of multilateralism and inclusiveness and was subsequently rejected by a vast majority of the developing countries. Another issue that was also raised by the LDCs was an “early harvest”, which meant that countries would agree on some of the already agreeable issues rather than wait for the full Doha package.

Unfortunately, though most of the countries were receptive of this idea, they failed to act on it and failed to agree on issues that could be “harvested early”. In it as well, the often argued proposal of duty free market access for LDC products and slashing down of cotton subsidies were rejected by the US. Meanwhile, the developed countries argued that they could agree on trade facilitation measures and make it an “early harvest” in 2012. But, the developing countries stated that any such “early harvest” should be related to agendas touching upon their development goals. These are a special LDC package, enhanced special and differential treatment, resolving problems arising from the implementation of WTO agreements and reduction of agricultural subsidies.

Second, it failed to agree upon the future course of the WTO given the changing global dynamics after fuel, food, financial and economic crises. The conference also failed to launch discussion on new issues such as climate change, energy security and food security. It was initially proposed by the developed countries but the developing countries argued that this would lead to digression from the development components of the Doha agenda.

Though the conference failed to agree on long discussed issues, the major highlight was the accession of Russia, Montenegro and two LDC Pacific Islands - Vanuatu and Samoa to the WTO, which now boasts 157 members. In the upcoming talks related to Doha agenda, all countries should focus on putting development concerns at the core and deliver on something concrete, which is agreeable to all members, to boost faith in the multilateral system. Moreover, the WTO should also focus on moving forward by incorporating the evolving challenges posed by global economic crises, resource scarcity, food insecurity and effective implementation of Aid for Trade agenda.

For more on the same issue, see this piece by ODI’s Yurendra Basnett and this one by Martin  Khor at Triple Crisis blog.