WTO Aid for Trade and CARICOM

By Elizabeth Morgan

The World Trade Organization (WTO) held its seventh Global Review of Aid for Trade (A4T/AfT), July 3-5, in Geneva under the theme ‘Supporting Economic Diversification and Empowerment”.

The Aid for Trade Initiative arose from the discussions on the link between trade and development (the development dimension) in the WTO Doha Development Round. The Initiative was adopted at the 2005 WTO Ministerial Conference in Hong Kong. A4T aimed to assist developing countries, particularly the Least Developed Countries (LDCs), to build supply-side capacity and trade-related infrastructure needed to benefit from WTO Trade Agreements and to expand their trade generally.

A 2006 Task Force proposed operationalizing A4T by measures including identifying the needs of the recipient countries, engaging donors, and establishing a monitoring mechanism through the biennial Global Reviews. Monitoring was undertaken by the WTO and the Organization for Economic Cooperation and Development (OECD). The focus should have been on providing additional resources specifically to trade projects and programmes. It was decided not to establish a new fund, but to utilize existing bilateral, regional and multilateral financial institutions and policies for Overseas Development Assistance (ODA).

After the 2008/9 financial crisis, ODA showed a marked decline. It was, thereafter, evident that A4T resources would come primarily from customary ODA allocations. Following the first and second Global A4T Reviews, it was assessed that the Caribbean region, with one LDC, was receiving the least amount of A4T resources. The Inter-American Development Bank (IADB), through which A4T resources were channeled, assisted Belize, Jamaica, and the CARICOM Secretariat to develop national and regional A4T strategies. It is doubtful whether these strategies were fully implemented. A problem for some highly indebted Caribbean countries, such as Jamaica, was that these resources were mainly provided through concessionary loans which could not be accessed due to limited fiscal space.

Nevertheless, the Caribbean received financial and technical assistance directed at building trade capacity through the Caribbean Development Bank (CDB), IADB, World Bank, and the European Union (EU) Economic Development Fund (EDF), among others. ODA to the Caribbean targeting trade has covered, for example, regional integration, trade negotiations, competitiveness, customs modernization, logistics, private sector development, and enhancing quality infrastructure.

The Doha Development Round, which A4T was to address, has fizzled. The main Agreement resulting is that on Trade Facilitation (TFA) which commits donors to providing technical and financial assistance for implementation. The focus is also now on implementing the UN Sustainable Development Goals (UN SDGs) goal 17 of which points to trade and aid as critical means of implementation. SDG 8 (Decent work and economic growth) calls for increased A4T to developing countries, particularly LDCs. The TFA and SDGs are now the priorities of recipients and donors.

As small, vulnerable economies (SVEs), trade is critical to growth and development in the Caribbean and export diversification is necessary. The reality is that Caribbean countries are still grappling with the implementation of the CARICOM Single Market and Economy (CSME) and trade agreements such as the CARIFORUM/EU Economic Partnership Agreement (EPA). Capacity constraints are still identified as a continuing challenge. SVEs need A4T. They also need to use it effectively. It does appear, however, that Caribbean interest in WTO A4T has been waning.

In his closing remarks to the 2019 Global Review, the WTO Director General, Roberto Azevedo, pointed to themes emerging, such as:

• The importance of digital connectivity and supporting developing countries’ participation in WTO E-Commerce work;
• Building diversification in climate sensitive sectors and increasing resilience; and
• Deepening understanding between trade and gender.

The DG stated that A4T continues to be a fundamental tool for economic empowerment with scope for adapting, changing, improving and evolving to further assist Members in addressing old and new structural challenges.

CARICOM participation in this Review seems to have been low-key. New issues raised are important to the region and the Caribbean should reengage in these trade and development discussions.

Submitted by Elizabeth Morgan, Specialist in International Trade Policy and International Politics

Source: CARICOM TODAY