unctad.org | Meeting with the WTO Task Force on Aid for Trade
Statement by Mr. Dirk J. Bruinsma, Deputy Secretary-General of UNCTAD
Meeting with the WTO Task Force on Aid for Trade
11 Jun 2006

Madam Chair,

Thank you for inviting UNCTAD to your meeting and for giving us the opportunity to explain our ideas on Aid for Trade. UNCTAD has already contributed a comprehensive paper on this initiative, so I will keep my remarks brief.

UNCTAD strongly welcomes the increasing recognition of the need to strengthen the supply capacity in developing countries, as it also welcomes the Aid for Trade initiative. As an organization that is focused on strengthening the link between trade and development, UNCTAD has long argued that unless a country has developed the necessary supply capacity, market access alone will not deliver the expected development gains. This meeting addresses the gaps in Aid for Trade, in terms of coverage, delivery and effectiveness, and I would like to say a few words about each.

1) Coverage

In our view, Aid for Trade should cover a broad range of needs:

  • Trade-related technical assistance;
  • Supply-side capacity-building;
  • Trade-related infrastructure (both "software" and "bricks and mortar"); and
  • Adjustment support.

The main reason for broad coverage is that only when there is capacity in all these areas will there be a beneficial effect. Otherwise the benefits will always be limited by the weakest link in the chain. Of course, we should be careful not to expand Aid for Trade to an unmanageable degree, and to avoid its overlapping with other social development assistance.

Trade-related technical assistance is important in building domestic capacities to take advantage of the trading system. There has been great focus, and understandably so, on assistance on WTO rules and negotiations. However, if developing countries are to become bigger players they will also require assistance on assessing national needs and identifying policy options. UNCTAD, for example, is carrying out national services sector assessments and providing policy advice on how to strengthen participation in fast-growing sectors of the world economy (such as electronics, textiles and clothing and renewable energy products), how to diversify the economy away from dependence on commodity exports and how to enhance participation in global value and supply chains, etc.

Building supply capacities is probably one of the most pressing needs. Here, a variety of measures are needed. They would include:

  • Implementation of a development-friendly competition policy, an area in which UNCTAD has already assisted 25 countries and eight regional groups;

  • A policy to attract FDI, and the establishment of an effective investment promotion agency. UNCTAD has completed 16 country-focused investment policy reviews, many of which have seen most of their policy recommendations implemented. We also helped set up a global association of investment promotion agencies;

  • Strengthening entrepreneurial capacities: UNCTAD´s EMPRETEC programme has trained a multitude of entrepreneurs since its inception; and

  • Creating national innovation systems through an appropriate science and technology policy.

There is a great need for trade-related infrastructure in many developing countries - a need that has been highlighted by the Millennium Project Report, inter alia - such as roads, transportation networks, ports and electricity networks. However, in addition to the significant need for "bricks and mortar" assistance, there is also a need for the "software" to ensure that the infrastructure is run smoothly. This should not be forgotten in the Aid for Trade effort. UNCTAD´s work in this field includes:

  • Customs automation software: Our ASYCUDA programme, aimed at making Customs administrations more efficient, has been installed in more than 80 countries. It has significantly reduced average Customs clearance times (e.g. in Zambia, from eight days to one day; in Zimbabwe, from 15 days to one day). It has also helped to increase Customs revenue and limit the opportunities for corruption.

  • Port management: We offer a training programme to build the capacity of developing-country officials to run ports efficiently.

  • Trade logistics: Last year, UNCTAD helped to create three transport corridors, significantly facilitating trade between the participating countries, namely, Namibia-Zambia, Lao People´s Democratic Republic-Thailand, and Bolivia-Chile.

  • Information and communication technologies: UNCTAD is monitoring the uptake of ICTs in developing countries, in part as follow-up to WSIS - and identifying policy options by which these countries can use the technologies for development, e.g. through e-tourism and e-finance.

UNCTAD is of the view that Aid for Trade should also cover assistance for adjustment to trade liberalization. This should include possible implementation costs arising from WTO obligations. Doing so would significantly improve the growth outlook for those countries that might be negatively affected in the short run. The greatest difficulty in this context is to assess the adjustment costs - a task for which we would be willing to contribute expertise.

Aid for Trade is necessary regardless of the outcome of the Doha Round. It is essential if LDCs are to benefit fully from market access opportunities. In addition to LDCs, there are of course other poor countries that could benefit from a broader Aid for Trade programme.

2) Delivery

As the amount of money available for Aid for Trade increases, it might be necessary to revisit the institutional arrangements to ensure both appropriate stakeholder involvement and effective delivery for beneficiaries.

There may not be a need to create a new fund if existing multi-stakeholder mechanisms are sufficiently strengthened. In the interest of effective delivery, the governance structure of the initiative should not be too complicated. UNCTAD stands ready to make a contribution and to cooperate with the Bretton Woods institutions and UN agencies in this effort. Of course, there is also a need for maximum transparency in the interest of donors and beneficiaries alike.

3) Effectiveness

In order for the Aid for Trade initiative to yield effective results, particular care should be given to:

  • Needs assessments: These should be carried out in advance of any Aid for Trade interventions, and could be modelled on the Integrated Framework´s Diagnostic Trade Integration Studies;
  • Ownership: It is now widely accepted that any technical assistance and capacity-building will be fully effective only if it is owned by the recipient country. In this respect, we think that the beneficiaries should be consulted, including on the institutional arrangements made;
  • Private-sector involvement (e.g. through the ITC); and
  • Monitoring and reporting mechanisms.

UNCTAD has developed significant expertise in a variety of Aid for Trade-related activities and has supported developing countries in their efforts to strengthen supply capacity through our research and analysis, intergovernmental deliberations and technical cooperation activities. Indeed, our next LDC report will be focused on the theme of "Building productive capacities". We would also be happy to contribute to the implementation of this initiative.

To sum up, Madam Chair:

  • This is about effectiveness,
  • this is about accountability, and
  • this is about managing for concrete results.

UNCTAD is fully prepared to play an important role in the Aid for Trade initiative.

Thank you.

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