Tuesday, January 1, 2013

WTO plans fourth Aid for Trade global review

At a time when the World Trade Organisation (WTO) has started preparations for the fourth Aid for Trade Global Review and its implementation status on the ground, the government has been preparing for Sectorwise Approach for the effective utilisation of Aid for Trade.
"The draft of Sectorwise Approach is ready and we are holding inter-agency consultations for the effective mobilisation of Aid for Trade," said joint secretary of the ministry of commerce and supplies Toya Narayan Gyawali.
Currently, funds for Aid for Trade are scattered under various ministries but after it comes under Sectorwise Approach, the ministry will have complete figures, he said, adding that it will also help increase the effectiveness of the fund.
WTO had also asked the ministry to help it review Aid for Trade, its effectiveness, and the status of national and local level implementation agencies. The ministry has already sent its review to be discussed during the fourth global review.
WTO director-general Pascal Lamy had announced that the fourth Global Review of Aid for Trade, titled 'Connecting to Value Chains', will take place on July 8-10 this year.
The Global Review, a biennial monitoring exercise conducted in collaboration with the Organisation for Economic Cooperation and Development (OECD), examines how support has been mobilised to help developing countries, in particular least developed countries (LDCs) like Nepal integrate into the international trading system and monitors the associated impact on development.
The review also provides strong incentives to both donors and recipients to advance the Aid for Trade agenda by highlighting ongoing needs and best practices.
The fourth Global Review will focus on how developing countries and LDCs are participating in global value chains and the barriers they face. It will also aim to determine how Aid for Trade can best be used to help developing countries enter and establish their own value chains.
"Looking through the prism of value chains challenges our preconceptions about trade and development," said Lamy, noting that the splintering of networks opens many different possibilities for developing countries. "Much of the past 50 years of development assistance and policy has been built on helping countries move to the first production link in the processing chain. Production sharing networks challenge this automatic assumption. They open a range of possibilities, of which this is only one."
Lamy added that value chains at a national, regional and global level could provide opportunities not only in industrial goods but also in services, agriculture and intellectual property.
On November 7, 2012, the Committee on Trade and Development had discussed preparations for the fourth Aid for Trade Global Review and reported progress in implementing Aid for Trade projects on the ground.
Aid for Trade coordinator at the WTO Secretariat Michael Roberts had then outlined the Aid for Trade monitoring exercise and highlighted the end of year deadline for member submissions.
They had also decided to hold Aid for Trade policy dialogue on January 16-17. The OECD policy dialogue will bring together a wide range of stakeholders from developing and developed countries to discuss how to continue delivering aid for trade results in a changing international environment for trade and development. The policy dialogue will discuss how Aid for Trade can remain relevant for its purpose by delivering and managing Aid for Trade and development results; easing the binding constraints to trade expansion, promoting regional Aid for Trade programmes, reducing the thickness of borders, linking to value chains and engaging the private sector.

Fact sheet
* Aid for Trade is about helping developing countries, in particular the least developed, to build the trade capacity and infrastructure they need to benefit from trade opening. It is part of overall Official Development Assistance (ODA) — grants and concessional loans — targeted at trade-related programmes and projects.
* It is recognised that Aid-for-Trade can be a valuable complement to the DDA, but it cannot be a substitute for the development benefits that will result from a successful conclusion to the DDA.
* Because trade is a broad and complex activity, Aid for Trade is broad and not easily defined. It includes technical assistance — helping countries to develop trade strategies, negotiate more effectively, and implement outcomes. Infrastructure — building the roads, ports, and telecommunications that link domestic and global markets. Productive capacity — investing in industries and sectors so countries can diversify exports and build on comparative advantages. And adjustment assistance — helping with the costs associated with tariff reductions, preference erosion, or declining terms of trade.
* OECD data show trade-related ODA commitments running at about $25 billion - $30 billion a year in the past few years, which is around 30 per cent of total ODA. It covers four main categories: (a) Trade policy and regulation amounted to roughly $0.9 billion in 2005. This helps build local capacities to development of national trade policies, participate in trade negotiations and implement trade agreements. Annual commitments have increased by about 50 per cent since the Doha Ministerial Declaration in November 2001.
(b) Building Productive Capacity amounting to roughly $9.5 billion. It includes trade development spending of about $2 billion a year. It is targeted at helping enterprises to trade and at creating a favourable business environment. Annual commitments have increased by about 75 per cent since the Doha Ministerial Declaration.
(c) Economic infrastructure spending was $12.1 billion in 2005. This assistance helps countries build the physical means — transport and storage, communications and energy — to produce and move goods and export them. Its value to a country's economy extends well beyond trade. Since there is no way of breaking out the amount that is strictly 'trade-related — how much of a road is used for export trade as opposed to general domestic transport — the total is treated as a proxy measure of Aid-for-Trade.
(d) Another component of the broadest measure of Aid-for-Trade is assistance for trade-related structural adjustment (about $3-6 billion a year). * At the WTO's Hong Kong Ministerial Conference in December 2005, the US, the EU and Japan made pledges to increase their Aid-for-trade contributions.
* Most Aid-for-Trade is disbursed bilaterally by donors or through multilateral and regional finance and development organisations, such as the World Bank and the regional development banks.
The WTO participates in the disbursement of a very small share of Aid-for-Trade in categories (a) and (b), through the DDA Global Trust Fund, the Integrated Framework, JITAP, the STDF, and the ITC.

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