7 July 2009
AID FOR TRADE
Director-General Pascal Lamy, at the closing session of the second global review of Aid for Trade on 7 July 2009, said “we have to maintain momentum and ensure that commitments are met.” Underlining the need to actively mobilize additional resources, he welcomed announcements of substantial commitments from Japan ($12 billion for 2009-11), the United Kingdom (£1 billion per year), the Netherlands (550 million euros per year) and France (850 million euros per year).
DG closing remarks
Thank you, Ambassador Servansing.
This has been an extremely useful session and I am very happy that I could be with all of you, not only to listen to your experiences about how Aid for Trade is working in your countries, but also to listen to your suggestions about the way forward.
One key aspect of the dialogue which we have had is that it has helped bring the trade practitioners and the development professionals closer to jointly move the Aid for Trade initiative.
If you work on agricultural development, you aim to increase the productivity of farmers so they sell more food products, both domestically and across borders. If you are involved in infrastructure development, you want those food products to travel along the roads and railways or through the ports and airports which you have built. And so on. Clearly, trade impinges on all sectors of the economy; it’s not a sector on its own — and it is this realisation that is important.
This fact also strengthens the case for mainstreaming trade into national development strategies. In the discussion over these two days, we heard how economic and social benefits can accrue from trade opening provided trade is mainstreamed. The reality is that trade pervades the fabric of global society. As the UN Secretary General said yesterday, “building more trade capacity is essential because trade can and must be part of our efforts to stimulate a recovery.” As one of you said today: Aid for Trade is now firmly established in the agenda for integrating developing countries into the trading system.
The centrepiece of this Second Review has been the joint OECD-WTO Aid for Trade at a Glance 2009. This publication shows trade is being prioritized by partner countries in national development strategies; donors are offering more and better Aid for Trade and new partners are becoming engaged in South-South cooperation. Furthermore, the increase in allocation to Aid for Trade has been achieved without reducing resources to other development priorities such as health, education or environment.
Aid for Trade grew by 10 per cent per year between 2005 and 2007; if you add non-concessional aid from international financial institutions, the figures nearly double in value.
A message which comes from these meetings is that we need to refine our monitoring in understanding how Aid for Trade is working in tandem with other financial instruments, in particular those offered by the international financial institutions. Not all supply side or economic infrastructure constraints can or will be addressed through an Aid for Trade response. For example, we have heard of various examples of how grant financing has been blended with other financing instruments.
As I said at the opening, if Aid for Trade was urgent in 2007, it is essential today. We have to maintain momentum and ensure that commitments are met. This implies an on-going role for the monitoring framework which our colleagues at the OECD are constantly refining. It also means refining the methodology and reporting. It is a fact that the activities of South-South partners, of which we have heard so much today, and which are growing in volume and importance, are not captured in the Aid for Trade numbers generated by the OECD. We need to give some attention to this as better coordination, which we are trying to achieve, is difficult without better information.
The three break-out sessions of this morning have highlighted the indispensable role of our regional partners. Through the work of the bilateral donors, regional development banks, regional economic commissions and regional economic communities, we have been able to make significant progress on implementation. I remain convinced that we need to build upon the progress we have achieved in strengthening the regional dimension of Aid for Trade.
This morning we also learnt that Aid for Trade needs to factor in specificities; for example, those of middle-income countries and the types of financing available to them; or those of landlocked countries, small economies, remote islands or countries emerging out of conflict.
Numerous interventions from the floor have further reinforced the message which we received during the monitoring exercise when we received 88 replies from our developing country members. Developing countries are taking ownership of their own initiative. Indeed, there seems to be a pent-up demand which is being finally released. This means that Aid for Trade is maturing. But at the same time Aid for Trade is a long-term endeavour which needs to be sustained over a long time. Our partners have reacted well to the lead taken by the WTO. We must allow them now to define their own roles in this process and participate further.
This is coherence in global economic policymaking in action. And it must happen at three levels. At national level through constructive dialogue between governments and their development partners; at regional level between regional economic commissions and their member governments, with international financial institutions and donors; and at multilateral level by keeping the spotlight on Aid for Trade in the G8, which I will attend tomorrow, the G20, the annual meetings of the Bank and Fund, the annual meetings of the regional development banks and so on. Now that we have generated this momentum, we must keep our foot on the gas and agree on a common destination.
So what next ?
At the 11 June meeting of the Committee on Trade and Development, I noted that we need to develop a framework that will allow us to better coordinate our efforts, mobilize additional resources, enhance political ownership and better prepare the way forward. In my view there are four very clear objectives which should inform our work going forward.
First, I believe that we need to build upon the progress we have achieved in strengthening the regional dimension of Aid for Trade. We will rely mainly on our regional partners including the development banks and bilateral donors to take the lead in evolving clear and focused regional Aid for Trade projects. We have an opportunity to advance this agenda by holding an ECOWAS Aid for Trade event in the Fall. I will be looking for similar opportunities in other regions. I would note that the Islamic Development Bank, UNECE and UNDP have already agreed on a roadmap with the economies of Central Asia.
Second, I believe we need also to enhance the role and contribution of the private sector in this initiative. Yesterday’s private sector session gave us much food for thought, particularly as regards the particular challenges of bringing SMEs into the picture is concerned. It also underlined how the imperative to respond to the pressing challenge of climate change, which can at once be a challenge but also an opportunity to unleash investment opportunity. The same can be said for helping meet international standards as well as increasing access to energy. One suggestion which particularly resonated was that of building partnerships with private foundations to tap into their resources and capacities to deliver effective and adequate Aid for Trade. Another suggestion was to focus business involvement in a specific sector such as logistics which cuts across a wide range of Aid for Trade activities.
Third, we should continue our evaluation work with specific focus on evaluating the impact of Aid for Trade. Aid for Trade should develop as a community of best practice. A first step in this direction is to inventory what is out there. The second is to look at common frameworks. We need to ensure also that we are not just measuring inputs and outputs, but tangible outcomes. I hold strongly the view that as national budgets come under increasing pressure, so we need to step up our efforts to show the value of what we are doing with evidence-based reporting on outcomes. As was mentioned by Mr Kuroda of the Asian Development Bank yesterday, in 1997 it took three days to pass goods from China to Thailand via Lao PD; in 2009, it takes four hours. If this is not a positive example of Aid for Trade, what is? In order to move further on this, we will as usual rely heavily on our partners. The WTO itself neither has the mandate, nor the capacity, to undertake its own evaluation of Aid for Trade.
Lastly, I believe we need to continue to actively mobilize additional resources and in particular, start looking beyond 2010. We have had reasonably clear commitments by donors up to 2010; we now need more clarity about the post 2010 horizon. Japan has given us cause for optimism. The commitment they offered of $12 billion over the period 2009-11 is up $2 billion in comparison with the commitment made for 2006-2008. The announcement made yesterday afternoon by Minister Thomas that the UK will spend around £1 billion sterling a year over the next three years to enhance growth and trade in poorer countries is also satisfying. The Netherlands indicated its commitment to spend at least €550 million per year on all categories of Aid for Trade. I just heard the French delegation announce a minimum of €850 million per year from 2010 that is + 50 per cent as compared with the 2002/2005 benchmark. This, of course, over and above fulfilment of their existing commitments. I would encourage other members to follow their lead. Mobilizing Aid for Trade resources will remain essential to help developing countries be prepared to better exit the crises, including by encouraging South-South Aid for Trade partnerships.
These are some ideas which come from these two days of discussions. They are not entirely new but what is more important is to now discuss them and turn them into your own work plan. I see a critical role for the CTD in ensuring our continued success. But we also need to ensure that we hear the views of the development partners.
I believe that we should reflect on what has been said at this Global Review and try to come up with a work plan which will give us direction and consistency, and which can also be fed into the Ministerial Conference, for its possible consideration in early December.
In so doing, we will have given ourselves clarity in approach and commonality in purpose — necessary ingredients to maintaining momentum on Aid for Trade.
I would like to finish by mentioning the context in which this Conference takes place: our efforts to conclude the Doha Round. As Cambodian Trade Minister Cham Prasidh said yesterday: “Aid for Trade and the Doha Round are Siamese twins. They cannot be separated because they share one heart.”