'Aid for Trade' on the Agenda as Trade Policy-Makers Meet in Geneva

"Multilateral trade liberalisation has the potential to lift millions out of poverty."

"Over the last year, thinking about the relationship between aid and trade has evolved considerably. The old mantra 'Trade not Aid' has now been replaced by 'Aid for Trade'. So, rather than view them as substitutes, most observers now view aid and trade as complements."

These were among the observations made by Commonwealth Deputy Secretary-General Winston Cox during the opening of the Aid for Trade meeting held in Geneva, Switzerland, on 21 and 22 March 2006. The meeting was organised by the Commonwealth Secretariat and held at the headquarters of the UN Conference on Trade and Development (UNCTAD). It sought to further strengthen developing countries' ability to contribute to the deliberations of the World Trade Organisation (WTO) Task Force, which is due to report by 30 July this year on the best ways to deliver 'Aid for Trade'. The crux of 'Aid for Trade' is to provide developing countries with adequate assistance to enable them to take advantage of increased trading opportunities.

Aid for Trade support should take the form of grants, be predictable, cover more countries than just Least Developed Countries, include an independent monitoring mechanism and be based on a process of identification of trade capacity needs that is truly country driven and owned, Mr Cox said. "The last point deserved emphasis because the severity of trade-related constraints varies considerably among developing countries."

He continued: "... we must be realistic. We must be careful not to make unrealistic claims about the potential development impact of aid for trade."

Mr Cox highlighted that the problems of adjustment and integration were not new. "However, we still have a lot to learn about the adjustment process that developing countries go through during and after multilateral trade liberalisation ...

"To stimulate debate, we commissioned Noble Laureate Professor Joseph Stiglitz to put his ideas on aid for trade on paper. His paper calls for a new architecture for delivering aid for development," Mr Cox said.

Professor Stiglitz's report was presented as the centrepiece for debate among the more than 100 countries that attended the Geneva meeting. The report proposes significant reforms in the existing channels of delivery of 'Aid for Trade'. It calls for the existing multilateral structure, involving the International Monetary Fund, the World Bank, the International Trade Centre, UNCTAD and the United Nations Development Programme (UNDP), to be consolidated into a new 'Global Trade Facility' (GTF), which -- like the Global Environment Facility -- would be located in the World Bank.

Professor Stiglitz explains that the funding for this facility, which would be additional to existing aid commitments, would need to be part of binding Doha Round Agreements.

Those invited to the Geneva meeting, which was co-sponsored by UNCTAD, included representatives of the Bretton Woods institutions, regional development banks, and other multilateral stakeholders like the WTO, the UNDP, the Development Assistance Committee of the OECD, the International Trade Centre and the Integrated Framework. Also invited were Geneva-based representatives of major bilateral donors, developing countries, including Least Developed Countries and trade preference-dependent small states.

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