WORLD TRADE

ORGANIZATIONWT/COMTD/AFT/W/1528 October 2009(09-5371)

Committee on Trade and DevelopmentAid for Trade

SECOND GLOBAL REVIEW OF AID FOR TRADE

6 AND 7 JULY 2009

SUMMARY REPORT

The attached summary report of the Second Global Review of Aid for Trade, which took place on 6 and 7 July 2009, is being circulated to delegations for information.

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SECOND GLOBAL REVIEW OF AID FOR TRADE

6 AND 7 JULY 2009

SUMMARY REPORT

I. OPENING ADDRESS..........................................................................................................5

II. SESSION 1: AID FOR TRADE – THE GLOBAL OUTLOOK.....................................5

III. SESSION 2: AID FOR TRADE – FROM COMMITMENT TO IMPLEMENTATION..........................................................................................................8

IV. SESSION 3: AID FOR TRADE – ASSESSING IMPLEMENTATION......................21

V. SESSION 4: AID FOR TRADE - PRIVATE SECTOR PARTNERSHIP FOR GROWTH...........................................................................................................................30

VI. SESSION 5: AID FOR TRADE – MAINSTREAMING TRADE IN NATIONAL AND REGIONAL DEVELOPMENT COMPETITIVENESS STRATEGIES............43

VII. SESSION 6: AID FOR TRADE – REGIONAL IMPLEMENTATION EXPERIENCES..................................................................................................................54

A. COMESA-EAC-SADC NORTH-SOUTH CORRIDOR....................................................54

B. GREATER MEKONG DELTA SUB-REGION.....................................................................58

C. INFRASTRUCTURE AND INTEGRATION CORRIDORS IN LATIN AMERICA......................61

VIII. SESSION 7: AID FOR TRADE – ASSESSING IMPACT AND EFFECTIVENESS 63

IX. SESSION 8: AID FOR TRADE – SOUTH-SOUTH COOPERATION EXPERIENCES..................................................................................................................71

X. SESSION 9: AID FOR TRADE – WAY FORWARD...................................................81

XI. SESSION 10: AID FOR TRADE – LOOKING AHEAD............................................109

ANNEX – ANNOTATED AGENDA ...............................................................................................113

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I. OPENING ADDRESS

1. Opening the Second Global Review of Aid for Trade, Mr.   Ban Ki-moon, Secretary-General, United Nations (UN), stated that the Review came at a critical moment. The global financial and economic crisis was having a severe impact on global trade, with a decline of ten per cent predicted in 2009.  Unless the crisis was reversed, it would unravel the progress that developing countries had made over the past two decades in reducing poverty.

2. Trade had long had tremendous potential as an engine of sustained economic growth and development.  Trade also had to be part of efforts to stimulate recovery. Mr. Ban Ki-moon recalled that the United Nations Conference on the World Financial and Economic Crisis and its Impact on Development had urged countries to meet existing pledges on Aid for Trade. The United Nations had repeatedly stressed Aid for Trade as a crucial component in improving trade competitiveness of developing country producers and exporters.

3. Trade openness alone was not sufficient.  Countries had first to have in place a competitive production base, the necessary infrastructure and legal frameworks in order to export.  Knowledge also played a key role in enabling countries to take advantage of international rules and opportunities. With these steps, as well as reforms to the global trading regime, trade could achieve a great deal.

4. According to Mr. Ban Ki-moon, the Aid-for-Trade initiative had made good progress in the three years since its launch.  The April 2009 G-20 Summit pledge of US$250 billion for trade financing could lead to a significant increase to the US$25 billion that Aid for Trade received in 2007. He noted with pleasure that a number of donor countries and agencies were steering aid towards policies and strategies that would bring practical content to the Initiative and urged other development partners to do the same.

5. The Secretary-General noted, however, that many developing countries had not benefited, even though they received traditional trade-related technical assistance.  To them, Aid for Trade remained a concept rather then a practical reality. The Second Global Review would help find ways to increase Aid for Trade without subtracting from the volume of official development assistance and without creating new debts.  He encouraged the meeting to find ways to make Aid for Trade more predictable and easier to access, especially for the poorest countries, but noted that beneficiary countries must also do their part.

6. The United Nations had expertise in trade and development and was well-positioned to provide capacity-building, advisory services and analysis to support Aid for Trade.  In conclusion, Mr. Ban Ki-moon stated that at this time of profound uncertainty and growing need, the UN looked forward to working with partners on the promising, Aid-for-Trade initiative. 

II. SESSION 1: AID FOR TRADE – THE GLOBAL OUTLOOK

1. Mr. Pascal Lamy, Director-General, World Trade Organization (WTO) , expressed his thanks to UN Secretary-General Ban Ki-moon for his opening remarks and noted that his presence sent a very strong signal of commitment from the whole UN family towards Aid for Trade.

2. The Director-General noted that much had been achieved since the launch of the Aid-for-Trade initiative in 2005. It had entered a new phase and was living up to its promise of moving from making trade possible, to making it happen. In the past 18 months, implementation had been stressed in national and regional events, the monitoring framework had been refined and developing country members had shown a much higher degree of engagement.

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3. The regional review meetings held in Zambia, Jamaica and Cambodia had underlined the commitment of partners and donors to cooperate and coordinate in the pursuit of common goals. Tangible progress had been made in turning commitments into implementation action.

4. Secretary General Gurría and his team at the OECD had done an excellent job in putting together the flagship report on Aid for Trade. The 2007 edition had been groundbreaking; the 2009 version should be prize-winning such was the depth of its analysis and the clarity of its presentation. The report painted an up-beat picture of trade being prioritized by partner countries in national development strategies; of donors offering more and better Aid for Trade, of new partners becoming engaged in South-South cooperation. The increases in Aid for Trade had been achieved without reducing resources to other development priorities such as health, education or environment.

5. The Director-General recalled that the global trading environment had worsened dramatically since the First Global Review in November 2007. Global trade growth of six per cent in 2007 had been replaced by a projected 10 per cent contraction in 2009. It was one of the biggest challenges that the multilateral trading system had faced since its inception. The crisis had a human face. Poverty alleviation targets, notably the Millennium Development Goals (MDGs), had become more challenging to achieve. If Aid for Trade was urgent in 2007, it was essential today. It was the investment that would allow many developing prepare to exit the crisis by enhancing their trade capacity.

6. Trade finance had been identified as a major constraint during the regional events held in 2007 prior to the current crisis. Since then the situation had worsened significantly. In this context, the Global Trade Liquidity Program was a very tangible answer to address supply-side constraints and was in harmony with the mandate given by Ministers in Hong Kong. Another key initiative was the Enhanced Integrated Framework (EIF) for least-developed countries (LDCs). After months of hard work by all stakeholders, the Director-General noted that the EIF was fully operational and that the first two projects, for Yemen and Sierra Leone, had been approved for funding.

7. The G20 process had highlighted the importance of sticking to commitments to scale up aid. It had also struck a note of optimism in its reaffirmation of commitments to meet the MDGs and to achieving Official Development Assistance (ODA) pledges, including commitments on Aid for Trade, debt relief, and the Gleneagles commitments, especially to sub-Saharan Africa. Collectively, it had to be ensured that this commitment did not fade. This was the reason why the theme for the Global Review was "Maintaining Momentum". The prize was better trade performance on the part of developing countries, and in particular, the LDCs. This trade performance had, in turn, led to economic growth which lifted people out of poverty. An early and successful completion to the Doha Round would enhance market access opportunities for the countries that needed it most. Aid for Trade would ensure that these market access opportunities were seized, in particular by the poorest Members of the WTO. A collective objective was to demonstrate what was known to be true: that Aid for Trade was worth doing and worth doing well.

8. The Director-General made it clear that it was up to Members to make this happen by integrating trade into national development strategies; by living up to aid commitments, and offering new ones; by turning commitment into concrete action, and by concluding the Doha Round. Equally critical to the success of these efforts, was the role and contribution of the private sector. The Director-General noted his interest in articulating a comprehensive strategy to enhance the role of the private sector, particularly in developing countries. In conclusion, the Director-General remarked that while WTO was not a development agency and did not aspire to become one, it remained committed to playing the role of Aid-for-Trade coordinator.

9. Mr. Angel Gurría, Secretary-General, Organisation for Economic Co-operation and Development (OECD), opened his speech with the proverb: "The best time to plant a tree is twenty

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years ago; the second best time is now". A fruit bearing tree was a fitting metaphor for the benefits that countries could reap from outward looking growth strategies. Although the relationships between international trade, sustainable economic growth and poverty reduction was complex, evidence strongly suggested that openness was fundamental to growth. No country had achieved sustainable growth in the long run without the expansion of trade flows. This was easier said than done. Low-income countries often lacked the basic capacity – in terms of policies, institutions or infrastructure – to exploit the opportunities that more open markets presented to trade out of poverty. The goal of the Aid-for-Trade initiative was to help them develop this capacity.

10. This challenge was more important than ever in the current context as developing countries had been hit hard by the crisis. Aid for Trade was an example of short-term measures with long-term impact. It was the classic double dividend that had been promoted as a good practice to exit the crisis.

11. Mr. Gurría called the Aid-for-Trade initiative a success. Since its inception in 2005, partner countries had increasingly prioritized trade in their development strategies and donors had responded with additional aid to help them overcome their supply-side constraints. OECD and WTO had been working together closely to monitor how this was taking shape. Between 2005 and 2007, Aid-for-Trade flows had grown by more than 20 per cent in real terms. Total new concessional commitments had reached more than US$25 billion in 2007. Funding for global and regional programmes, identified as an area which required special attention, had more than doubled since 2005. Preliminary data for 2008 showed a further increase of Aid-for-Trade flows by around 10 per cent in real terms. In November 2008, OECD leaders had endorsed an "Aid Pledge" and committed to maintain aid flows. It was also important to note that Aid-for-Trade increases were "additional" to other aid flows, i.e. they did not come at the expense of funding for social programmes, such as health and education.

12. Non-concessional lending from multilateral and regional organizations had generated US$27 billion in trade-related financing. In 2007 more than US$52 billion had been committed to tackle supply-side constrains in developing countries. OECD calculations showed disbursement rates hovering around 90 per cent; meaning that nine out of 10 commitments actually materialized in aid-for-trade projects and programmes.

13. Partner countries were increasingly taking ownership of the Aid-for-Trade initiative; almost 90 had participated in the 2009 monitoring exercise, compared to only seven two years ago. A majority of these countries had assessed that they were mainstreaming trade in their development strategies. In the context of the economic crisis, and given the competing claims on limited donor resources, this increased engagement by partner countries would help secure continued funding for their Aid-for-Trade priorities.

14. The mirror image of this engagement by partner countries was that "Aid-for-Trade" was also assuming growing importance in donor programmes. Donors were increasing Aid-for-Trade resources, bolstering in-house expertise and raising awareness among policy-makers and practitioners at home and in the field. Most had met their 2005 Hong Kong Aid-for-Trade pledges. And, despite the economic crisis, donors had reaffirmed their commitments to sustain aid flows. This interest of donors was also evidenced by the participation of 57 bilateral and multilateral donors in the survey, compared to 43 the first time.

15. The second monitoring exercise had put a spotlight on a number of positive developments. Existing coordination and delivery mechanisms had resulted in more and better Aid for Trade, i.e. aid that was more predictable and sustainable, based on partner priorities, aligned around their systems and with more harmonization among donors, including those from the South. This was a huge success. And better still, donors had indicated that they expected their Aid-for-Trade allocations to continue to grow over the medium term. For that to happen, it was necessary to continue to build on

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the progress made. This would depend, critically, on: (i) linking Aid for Trade to the wider development agenda, and (ii) broadening and deepening the Aid-for-Trade dialogue.

16. Aid for Trade could play an important role in supporting development goals. It could provide immediate economic stimulus and create opportunities for local employment. But beyond that, Aid for Trade could also help developing countries build capacities that, in turn, could contribute to a healthier environment and to fighting poverty. Linking Aid for Trade to a more inclusive, global development agenda required broadening and deepening the policy dialogue. Mr. Gurría said that the Aid-for-Trade initiative could make a real contribution to the common objective of a more inclusive and environmentally sustainable world economy.

17. The Aid-for-Trade country fact sheets contained in the joint OECD-WTO Aid-for-Trade at a Glance 2009 report (hereafter referred to as "Aid-for-Trade at a Glance 2009 report") were a first effort to reinforce – at the country-by-country level – the links between the 'demand', the 'response', the outcomes, and the impact of Aid-for-Trade projects and programmes. The value of these country fact sheets lay in creating incentives – through enhanced transparency and accountability – to improve the synergies between Aid for Trade and a broader development agenda. This, in turn, would encourage more and better Aid for Trade.

18. The OECD would continue to work closely with the WTO to monitor Aid for Trade; to collect and synthesize good practices that would help focus Aid for Trade on delivering results; to also design a common evaluation framework to assess Aid-for-Trade outcomes and impacts in terms of trade capacities, poverty reduction and environmental sustainability.

19. In conclusion, Mr. Gurría said that one should not forget to pick the low-hanging fruit of the tree we planted in 2001. He called for a conclusion to the Doha Development Agenda which would, through increased trade, help raise millions of people out of poverty.

III. SESSION 2: AID FOR TRADE – FROM COMMITMENT TO IMPLEMENTATION

1. Mr. Robert Zoellick, President, World Bank , stated that the world was in the midst of the most serious global financial and economic crisis in 70 years. Between October 2008 and April 2009, Central and Eastern European exports were down 35 per cent, East Asian exports were down 25 per cent and Latin American exports down 20 per cent. The large drops in trade reflected a more integrated world where a significant amount of trade was occurring within global supply chains. Each dollar of exports contained more imports than before – so contracting consumption in high-income countries had a magnified effect on exports from developing economies. Even as recovery in output began, the recovery in employment was likely to lag behind by some 12 to 24 months.

2. Mr. Zoellick cautioned that the politics of trade would not get easier in the coming months. Thus far, instances of protectionism had been a low grade fever rather than a full-blown influenza. But the temperature of the fever was rising. High-income countries had used subsidies for troubled industries, while low-income countries were using selective increases in border barriers. These trends could easily spin out of control in coming months as unemployment rose, and one country felt compelled – "tit-for-tat" – to respond defensively to the policies of another. The United States' "Buy America" provisions were an example that had received attention; as local governments in the United States began discriminating in procurement, Canadian localities started to respond in kind. Both countries suffered. And China had adopted "Buy Chinese" provisions as part of its Government stimulus programme. Shortly after the European Union had re-imposed subsidies for some dairy exports, the United States had followed suit with its own dairy export subsidies. Mr. Zoellick warned that government leaders needed to recognize that they were playing with fire.

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3. Protectionism was particularly damaging to developing countries, especially to those with weak fiscal positions and those that depended heavily on exports of a small number of products. Garments, for example, comprised more than three-quarters of Bangladeshi and Cambodian exports. So even when global growth recovered, protectionist actions that prevented developing countries from benefiting from the recovery would protract the suffering. This need for restraint against trade barriers applied as much to developing as to high-income countries. South-South trade was becoming increasingly important: one-third of Africa’s exports went to developing countries.

4. Remembering his time as the US Trade Representative, Mr. Zoellick opined that it was far better to be on "offence" rather than "defence" – to be debating how to further open markets rather than just beating back protectionist measures. The successful completion of the Doha Round would be the best way to concentrate attention on opening markets. And there was a good deal on the table right now. From a development perspective, the Doha agreement would provide important disciplines on agricultural subsidies that depressed the incomes of poor farmers, lowered tariff peaks that protected labour-intensive manufactures, and curtailed tariff escalation that discouraged value addition in developing countries. There were also benefits to be gained from lower prices for imports and more competitive services. Trade barriers were defended by those with preferred positions: it was those without special influence who were hurt the most. Key WTO Members needed to step up. Leading developed countries had a responsibility to try to solve the remaining problems, but the developing world’s engagement was critical too; there was an opportunity to shape the multilateral trade architecture for a generation to come.

5. Turning to the World Bank Group’s Aid-for-Trade work, he said it had been recognized that lower trade barriers and trade agreements needed to be combined with stronger "hardware" and better "software" to boost trade. The Bank could help with the "hardware" of ports and infrastructure and with the "software" of clear customs rules, support for logistics chains and standards, trade finance and developing a better climate for private business. The World Bank Group’s total lending and investments for trade had doubled from about US$10 billion a year during 2002 to 2005 to an average of US$20 billion a year in 2007 and 2008.

6. The Bank's Aid-for-Trade lending to low-income countries was funded through the International Development Association (IDA), which provided grants and no-interest loans for the 79 poorest countries. IDA's Aid-for-Trade financing had risen from US$2.4 billion a year from 2002 to 2005, to an average of US$3.9 billion for each of 2007 and 2008. And the number of projects had increased dramatically – to 123 a year. More than one-third of this lending was for sub-Saharan Africa. The World Bank Group as a whole had increased trade-related lending to middle-income countries from an average of US$6.6 billion a year from 2002 to 2005, to an average of US$12.6 billion in 2007 and 2008.

7. For example, the Bank had launched a US$250 million "Integration and Competitiveness Project" in Tunisia. The project was designed to improve competitiveness by reducing trade costs and improving the business climate – including through streamlined border clearance procedures and e-government. The Bank Group's private sector arm, the International Finance Corporation (IFC), had added another US$3.4 billion a year in 2007 and 2008 in investments related to trade. The IFC was particularly focused on building new productive capacity in low-income countries, especially in Africa. "Crowding in" the private sector was going to be essential to keep trade flowing.

8. Success in Aid for Trade went beyond simple dollar numbers. Technical assistance, analysis of policy options, and sharing learning about what worked for trade might be less quantifiable – but just as critical. For example, countries could benefit from training to upgrade the skill levels of their civil servants, tackle problems of corruption, and set up systems of accountability and performance standards.

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9. When trade finance had begun to dry up last year, strangling exports and imports around the world, the Bank Group had worked together with the WTO to help to mobilize additional resources. Trade credit guarantee coverage was boosted to US$3 billion for developing-country banks, many of them in Africa. The US$50 billion Global Trade Liquidity Program (GTLP) had been launched in support of trade finance. Under this programme, for every 40 cents invested by the Bank and its public partners, commercial banks would put up 60 cents more.

10. Together with the UK, the Netherlands, and Sweden, the Bank Group had also launched a new Trade Facilitation Facility at the WTO-COMESA Aid-for-Trade Conference in April. 1 The first projects would target areas such as improving the Chirundu border crossing between Zimbabwe and Zambia, creating customs value databases for LDCs in Southern Africa, and building the capacity of the Abidjan-Lagos corridor organization.

11. The crisis offered an opportunity to develop new partnerships – especially with the private sector. Who better to help on trade facilitation than traders? There were some good examples of productive partnerships with the private sector at the global level, notably with international logistics and express companies. At a recent meeting of the World Bank Group with private investors in Africa, there had been agreement to pilot new approaches to facilitate transit trade on the Abidjan-Lagos corridor in Nigeria.

12. The crisis had also revealed the importance of working with civil society. A good example was the Global Trade Alert initiative, a web-based tool that drew on inputs by trade policy institutes from around the world to provide real time information on new trade-distorting measures and barriers.

13. The crisis provided a political window of opportunity to address long-standing bottlenecks to competitiveness. Through the Bank's Doing Business and Logistics Performance Index awareness had been raised of the importance of reforms for trade competitiveness, and especially trade facilitation, as well as identifying key bottlenecks. The payoffs could be large. For one major trucking company in Kenya, for example, improvements in trade and transport facilitation had translated into a 50 per cent increase in vehicle utilization – from 8,000 km to 12,000 km per truck per month.

14. In Mr. Zoellick's opinion, the real success of Aid for Trade lay in its results. In Mali, mango growers had seen an increase in the volume of fruit exports to Europe after the Bank Group helped improve practices in mango production, quality, and commercialization. Rural smallholders were reviving abandoned orchards and raising their incomes. In Morocco, garment exporters had benefited from improvements made by the government, with the Bank’s support, in trade facilitation, transportation, and logistics, which had reduced transport times to European markets. In East Africa, most trucks clearing the Malaba border between Kenya and Uganda now waited three hours instead of three days. This was a result of the one-stop border post concept, and modernization and interconnectivity of customs systems. This work also included simplified processes at the Port of Mombassa in Kenya and road rehabilitation along the Northern Corridor. Similar results were being seen in other parts of the world: improved competitiveness in Mauritius by reducing trade barriers; more efficient processing of goods through customs in Laos and Cambodia after a major customs reform project; soaring customs revenues and reduced waiting time for trucks in Afghanistan after a Bank project helped modernize major border crossings.

15. The modern open trading system had been forged out of historic adversity. The current financial crisis which faced the world was also historic. For Mr.  Zoellick, it was essential policymakers continued on the same path of openness. There were many planks upon which recovery would be built – and trade was one of them. Trade was one of the first sectors to be decimated by

1 COMESA-EAC-SADC North-South Corridor Review held in Lusaka, Zambia on 6 and 7 April 2009.

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contracting consumption in high-income countries. But it would also be one of the first sectors to recover once the global economy picked up steam. Those countries that position themselves now to take advantage of renewed trade would accelerate out of recession with the fastest momentum.

16. In conclusion, Mr. Zoellick said that this meant that efforts at promoting Aid for Trade – and in keeping markets open during the current global crisis – had assumed a new urgency. Shared efforts to boost Aid for Trade and to help the workers, farmers, and consumers engaged in trade would pay dividends in expanded opportunities, lower poverty, and higher growth. The World Bank Group would work hard to be a partner in this process.

17. Mr. Dominique Strauss-Kahn, Managing Director, International Monetary Fund (IMF) , began his intervention by noting that the presence of so many eminent persons underlined that trade was not a special issue set apart from development and financing. Developing countries had been hard hit by the global financial crisis. In most emerging countries, the consequences of what had started almost two years ago in the US was only now being felt. In low-income countries, the direct financial impact had been rather limited, but the downturn in growth had led to decreasing exports, decreasing foreign direct investment (FDI), decreasing price commodities and falling remittances. These spill-over effects were threatening to roll back the hard-won gains on macro stability made over the last decade.

18. The IMF was forecasting, together with other institutions, that recovery would probably take place in the first semester of 2010. Forecasts in this period were even more uncertain than they were at other times. Recovery could only take place providing the right policies were in place, including the cleansing of the balance sheets of the banking sector. A lot had been done at the beginning of the crisis by central banks to provide liquidity, learning from the errors of the great depression more than 70 years ago. The second line of defense had been the different stimulus packages which had been implemented around the world – where the fiscal room was available to implement such policies. In January, the IMF has asked for a global stimulus of two per cent. When combined, the various stimuli packages added up to this amount, but these amounts were unevenly spread – higher in some countries, lower in some others. Altogether though, these stimuli efforts have limited a lot the negative effects of the crisis.

19. The IMF had experience of more than 100 banking crises over the last 70 years. One common conclusion across these crises was the fact that recovery never really commenced until the balance sheets of the banks were cleansed. And this had not been totally done. It would be unfair to say that nothing had been done – a lot had been done – but there was still a lot left to do. Depending on the speed of this cleansing of balance sheets, recovery would come sooner or somewhat later.

20. Trade was not only a consequence of growth, it was a factor in growth. That was why increasing financing on highly concessional terms in line with the Gleneagles commitments was absolutely essential for emerging and low-income countries.

21. The IMF provided the macro financial environment which made recovery possible. It had improved access to crisis-related facilities and supported a large range of countries including Haiti, Zambia, and Grenada, and had increased the support it gave to different countries under the exogenous shock facility (e.g. to Kenya, Senegal, Tanzania, and others). Doubling the access limits for this programme meant more financing for the IMF's membership.

22. The IMF had also secured a tripling of its lending capacity. In reply to criticisms that the way the IMF leant was too rigid, Mr. Strauss-Kahn argued that the IMF had much more flexibility now than in the past to consider the real political and historical situation of the countries, and not just the macroeconomic figures. This meant streamlining conditionality, focusing on what was critical and not including a lot of other things which might be good for countries, but which had little to do with the programme. Ensuring social safety nets was a case in point, and the IMF was now allowing more

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spending than before on social programmes, as the most vulnerable had been hit hardest by the crisis. The issuance of US$250 billion in Special Drawing Rights, as proposed by the G20 and decided at the IMF spring meeting, was complete. For low-income countries, this meant close to US$20 billion in reserves which would help stability.

23. Mr. Strauss-Kahn was more hopeful than ever that a Doha deal could be done, but cautioned Members that it rested on their shoulders. He added that the conclusion of the Round was not sufficient. Aid for Trade was also needed to lay the bricks for the foundation of a dynamic global system. It was absolutely critical for developing countries if they wanted to benefit from a return to growth.

24. He cautioned against a new "financial protectionism" whereby countries called back their capital from developing countries. This was a new kind of protectionism which put national economies first without consideration for the negative impact on other economies. Mr. Strauss-Kahn referred to a number of instances in which major efforts had been made to recapitalize national banks, with strict accompanying instructions to keep this money at home. This new kind of protectionism was more difficult to fight against, but it involved the same threats as traditional protectionism with similarly negative effects. In closing, Mr. Strauss-Kahn assured the meeting of the IMF's continued engagement.

25. Ms. Helen Clark, Administrator, United National Development Programme (UNDP) , recalled that the global recession had come on top of the recent experience of high food and fuel prices. Developing countries were experiencing serious drops in exports, in investment and in remittances. Those least responsible for the crisis were also the least able to respond. Developing countries needed more support so that the hard won progress towards achieving the MDGs was not reversed.

26. UNDP had an important role to play in articulating and supporting a coherent global response to the current global crisis. The UN had a humanitarian imperative to help countries put in place social protection systems which addressed the needs of those who were vulnerable. It was also important to support maintenance of the investments made in poverty reduction and longer term development. The building blocks for recovery and renewed growth had to be put in place and the capacity of countries to engage in trade was central to that endeavour. International trade was a powerful engine for economic growth and for achieving the MDGs. It was imperative that the Doha Round of trade negotiations was completed and that it had a strong development component as had been envisaged when it was launched in 2001. But to take advantage of more open markets, nations needed to build capacity, infrastructure, and institutional frameworks. Aid for Trade was a way of ensuring that this happened.

27. The Aid-for-Trade at a Glance 2009 Report contained good news. Commitments had steadily increased since the initiative had been launched in 2005 at Hong Kong, reaching US$25 billion in 2007. This was encouraging, as were the findings that developing countries were making progress in mainstreaming trade in their development strategies and that trade was increasingly the main driver of regional integration.

28. Ms. Clark foresaw two challenges where concerted action was needed, especially by donors. Firstly, a robust rate of real growth in Aid for Trade needed to be sustained. This had to be truly additional, without detracting from aid to the social sector and for other purposes. ODA pledges already made, including those at the G8 summits, had to be met, if not augmented, to support low- income countries through the current crisis. The forthcoming G8 summit had the opportunity to follow through on the 2005 Gleneagles Commitments, particularly on aid for African countries. Secondly, Aid for Trade to low-income countries was growing faster than that to other income groups of nations. While that was to be welcomed, there was still more scope to target resources so that the

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poorest countries received the most Aid for Trade – and so reducing the current concentration of assistance.

29. UNDP was strongly committed to the Aid-for-Trade initiative, and to the Enhanced Integrated Framework Initiative for Least Developed Countries. Both were important in building more inclusive and fair globalization which expanded opportunities for all. UNDP’s trade-related support emphasized interventions in three main areas: (i) assistance to partner countries on mainstreaming trade into national development and poverty reduction strategies; (ii) capacity support to negotiate trade agreements which prioritized human development outcomes; and (iii) capacity support to enhance countries’ competitiveness and to ease supply side constraints. Kazakhstan, Kyrgyz Republic, and Uzbekistan were examples of countries where UNDP had supported trade needs assessments – an essential first step in establishing national priorities for Aid-for-Trade support. In response to demand from the Central Asian countries for a regional initiative, this support was now being extended to Afghanistan, Azerbaijan, Tajikistan, and Turkmenistan, and also to the Southern African Customs Union and its member states. In middle-income countries, such as Syria, UNDP had provided support to governments for WTO pre-accession processes.

30. UNDP also fostered South-South cooperation on trade, and was helping to share experiences and expertise on Aid for Trade. In this respect, UNDP had coordinated the preparation of a guide on best practice for trade needs assessments. UNDP’s work on trade was a vital part of its effort to help countries reduce poverty and achieve the MDGs. In these challenging times, it was imperative that there was greater support for enhancing countries’ capacity to grow through trade and for laying the basis for long-term and sustainable development. The Aid-for-Trade initiative was an excellent way of helping to make that happen, and Ms. Clark stressed that UNDP was pleased to be a partner in the initiative.

31. Mr. Donald Kaberuka, President, African Development Bank (AfDB) , began his intervention by noting that at the start of the current economic crisis there was an optimistic, perhaps naïve, view that Africa would not be affected. The reality was that the crisis had come sooner, was deeper and could last longer in Africa than anyone had expected. The crisis had been transmitted to African economies through trade, or more specifically, the commodities channel. Those economies most dependent on commodities had suffered the most.

32. Projections suggested that African growth would be cut to three per cent by the current economic downturn, but this average hid a more complicated reality. About a dozen countries were still holding out and growing at about five per cent. Another dozen or so were showing surprising resilience and holding growth at around three per cent, but there was a group of countries, about 26 in total, who were causing lot of concern. Aid for Trade was more critical than ever before, as in the same way that Africa had been affected faster, so its recovery would be slower once the world economy returned to growth.

33. Mr. Kaberuka informed the meeting that the AfDB was launching an initiative to look at Africa's port capabilities, examining the delays, explaining their causes and examining options to ensure that port capacity was maximized. A lot of progress had been made in mainstreaming trade into national plans. One example was the number of countries which had now allowed 24-hour border opening. In the past, many border delays were caused by frequent border closures.

34. The AfDB had increased almost three-fold its support for regional programmes, mainly trade-related infrastructure, building the capacity of regional economic organizations and relevant regional public goods. Experience had shown that international aid allocation was essentially national and performance-based. There was a view, which Mr. Kaberuka thought was misleading, that regional programmes provided large free riding problems. This view constrained AfDB capacity to increase support for regional programmes. It created an unnecessary competition between national and

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regional resources. Mr. Kaberuka felt this issue needed to be tackled head-on. The African Development Bank committed about 20 per cent of its resources to regional programmes. This was not enough. Mr. Kaberuka noted he would like to be able to do more for regional programmes, not least because they reinforced national programmes.

35. Another lesson learnt was with respect to the capacity of regional economic organizations. Mr. Kaberuka opined that the best way to build the capacity of these institutions was not to bypass them but to work with them and build capacity over time. There was no alternative to these organizations. AfDB was working on regional infrastructure, for example a 250 kilometre highway in the East African community, a major portion of the trans-African highway between Nigeria and Cameroon, and another US$250 million programme between Zambia, Malawi and Mozambique. All these programmes underlined the need for stronger, regional ownership of these programmes. This could only come about through increasing collaboration with, and between, the regional economic communities (RECs).

36. During the structural adjustment years, many services critical to African trade had been privatized. For the railway networks, this strategy had not worked. The railways were in a ruinous state. The time had come to re-examine this issue as railways were an ideal mode of transport for bulky, raw materials. In collaboration with the World Bank and other institutions, the AfDB would be re-examining the issue of railway concessioning – a huge impediment to the trade performance of the continent

37. Turning to commodity dependence, Mr. Kaberuka noted that if one looked at East Africa over the last five years, economic fortunes had fluctuated depending on the cycle of commodities. Over the last decade good growth had been experienced on the back of strong commodity demand and because of increased regional trade in both recorded and unrecorded trade.

38. On trade finance, Mr. Kaberuka recalled that, at the onset of the current crisis, the AfDB had been of the view that it was a development institution whose role was long-term project finance. Trade finance had not been considered part of its mission. But providing trade finance had become an emergency and so AfDB had put in place a US$1 billion trade finance facility. AfDB was joining the International Finance Corporation in the Global Trade Liquidity Program and contributing US$500 million dollars. Another half a billion dollars was being put at the disposal of African finance institutions and sub-regional organizations.

39. Mr. Kaberuka noted the outcomes of the London G20 summit, but stated that it was clear that the next G20 would have to look again at the issue of low-income countries. Their issues would not go away quickly. He felt it important that a new look was taken at what low-income countries were doing to build up their own potential.

40. In closing, Mr. Kaberuka noted his optimism about Africa's development. If the crisis had come 20 years ago, the consequences for the continent would have been far more serious. In Mr. Kaberuka's view, the reforms initiated over the last 15 years had produced a continent which was much more resilient, and better able resist external shocks. In contrast to richer countries which where putting up financial and other barriers, African countries had actually accelerated their pace of reforms throughout this crisis.

41. Mr. Haruhiko Kuroda, President, Asian Development Bank (AsDB) , recalled that the AsDB had been active in Aid for Trade since 2006, as a member of the WTO Advisory Group, and as co-host for Regional Review Meetings in Manila in September 2007 and in Siem Reap, Cambodia in May 2009. The AsDB also served as the secretariat of the Regional Technical Group for the region.

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42. Recent meetings had underlined three key points for making Aid for Trade more effective. The first was that regional approaches that supported national development strategies were best for multiplying the benefits of Aid for Trade. Second, establishing cross-border economic corridors lay at the heart of successful Aid-for-Trade programmes. And third, building strong partnerships between governments, the private sector, and the donor community ensured the sustainability of benefits.

43. The Asia and Pacific region had prospered immensely through export-led growth over the past four decades. Many countries though still continued to experience lagging growth and severe poverty. The AsDB estimated that as many as 900 million people in developing Asia lived on less than US$1.25 per day. And even within more prosperous countries, rich and poor regions existed side-by-side, making the two faces of Asia a striking reality. The global economic crisis had exacerbated the situation. With a precipitous drop in the region’s exports, aggregate Gross Domestic Product (GDP) growth in developing Asia was forecast to decline from 6.3 per cent in 2008 to around 3.4 per cent this year. While the region was expected to recover to a 6 per cent aggregate growth in 2010, with a gradual pick up in external demand, lower income countries and small states would probably still lag behind and rising poverty was a major concern.

44. Rebalancing growth toward greater domestic and regional demand was an important key to the region's recovery. This would foster increased intraregional trade, help the region recover faster and strengthen Asia's approach to open regionalism. It was critically important, however, that countries refrain from taking protectionist measures. In the wake of falling demand and job losses, protectionist pressures were rising, largely due to the influence of political lobbies in declining sectors. Some countries appeared to be resorting to traditional forms of protection such as tariffs and subsidies, while others were using more subtle measures, particularly sanitary and phytosanitary (SPS) measures, anti-dumping measures, and even so-called "green protectionism". To counter this, the Asia and the Pacific region needed to keep markets open, cooperate regionally, train workers and develop safety nets.

45. Aid for Trade was vital for economic recovery and for long-term development and structural change. There was no "one-size-fits-all" approach to Aid-for-Trade projects. However, AsDB's experience suggested that project assistance yielded large returns. Of course this was best where political will and effective donor coordination combined. Indeed, these were the core lessons that flowed from more than 15 years supporting the Greater Mekong Subregion (GMS) programme. Under the GMS programme, Cambodia, China, Lao People's Democratic Republic (Lao PDR), Myanmar, Thailand and Viet Nam had come together to promote development through closer economic linkages. Substantial progress has been made since the programme began in 1992. As of the end of 2008, 41 GMS projects had been implemented costing an estimated US$11 billion of which AsDB has extended loans worth US$3.8 billion and co-financing worth US$4 billion.

46. The GMS north-south corridor, which linked China and Thailand though Lao PDR, illustrated what could be achieved. In 1997, it took three days for goods to move across one 270 km section of dirt track along the corridor in Lao PDR. Today that same trip took four hours, with a large increase in commercial traffic, thanks to a US$90 million project – funded by China, Thailand , and AsDB. Most importantly, last year’s per capita GDP in one of the poorest provinces in Lao PDR rose sharply.

47. The GMS countries' share of trade among themselves rose sharply over the past decade. GMS initiatives had brought rapid expansion to corridor projects. Critically, the GMS transport and trade facilitation programme had already created a demonstration effect and was being replicated in other sub-regions around developing Asia, such as in the more recent Central Asia Regional Economic Cooperation (CAREC) initiative. As the region's development bank, AsDB was the natural catalytic agent for helping to mobilize and channel Aid-for-Trade effectively. This could be done initially in three ways: first, through increased lending for trade-related infrastructure at regional, sub-regional and national levels; second, by helping to coordinate the many participants in Aid for Trade

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as secretariat for the newly created Regional Technical Group, co-chaired by Cambodia and Japan; and third, by sharing cross-border experience and technical expertise on Aid-for-Trade activities through policy dialogues and studies. In conclusion, Mr. Kuroda looked forward to collaborating with global and regional development partners in carrying forward the Aid-for-Trade initiative in Asia and the Pacific.

48. Mr. Thomas Mirow, President, European Bank for Reconstruction and Development (EBRD) , expressed his strong support for the Aid-for-Trade initiative. EBRD had been established in 1991 to promote the transition of the former centrally planned economies of Central and Eastern Europe towards market based economies. One of the key challenges had been the need to integrate these economies into international markets so that they could fully benefit from skills, know-how and technological transfer that were associated with trade.

49. Transition countries had overwhelmingly endorsed trade openness and many were now members of the WTO. Mr. Mirow cautioned that the significance of the institutional reforms and changes these countries had made should not be underestimated. Even countries in the CIS (Commonwealth of Independent States) yet to become WTO members had become more open to international trade by most standards. Average tariff rates in transition countries were only 4.5 per cent in 2007 – much lower than the average of 8.7 per cent for middle income countries – and their trade to GDP ratio had exceeded 110 per cent in 2008.

50. Rapid WTO accession by Russia and several other countries in the CIS region remained a crucial target that should not be allowed to slip. WTO membership conveyed a stability and predictability to global economic relations for which there was no substitute, and it helped anchor domestic reforms. The formation of a customs union between Russia, Belarus and Kazakhstan could be beneficial, but Mr. Mirow cautioned that it should not become a distraction from WTO entry negotiations. Equally, he appealed to negotiators on all sides to show the necessary flexibility by keeping their eyes on the larger goal.

51. As a project-based institution with a mandate to work with the private sector, EBRD provided support through trade finance, investment in cross-border trade infrastructure, and finance and technical support to enterprises to help them explore new foreign markets and improve product quality. The economic downturn had reminded EBRD that market frameworks and institutions were vulnerable to changing global pressures. EBRD expected its region’s economies to suffer a major contraction in growth in 2009, with output falling back to 2006 levels. Similarly, it expected trade volumes to decline sharply. Recovery was only likely during 2010, and even then it was expected to be halting. International capital flows would remain far more modest than in the recent past. Support for trade by public institutions had become even more important. Like other International Financial Institutions (IFIs), the EBRD had responded with a rapid crisis response programme. EBRD's lending and investment volumes in 2009 were expected to increase beyond €7 billion, up from €5.1 billion in 2008.

52. Mr. Mirow strongly welcomed Director-General Lamy’s commitment to systematically monitor and mobilize trade finance. Trade finance had become scarce and, where it was available, more expensive. This was both because of global liquidity shortages and a general re-assessment of counterparty risk concerning trade finance under the Basle II requirements. In turn, this may have further exacerbated the contraction in trade. Drawing on its close working relationships with local financial institutions, the EBRD had developed a trade financing programme that promoted trade by overcoming trade credit counter-party risks between banks. Since its launch ten years ago, the EBRD had supported over 8,000 transactions worth €5 billion through its Trade Facilitation Programme (TFP).

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53. In response to crisis needs in the region, in 2009, EBRD had nearly doubled the annual limit of the TFP programme from €800 million to €1.5 billion. However, a surprising decline in demand for trade finance had occurred during the first five months of 2009. Mr. Mirow believed this partly reflected declining trade volumes but also a persistent reluctance by commercial banks to take additional trade finance risks on their clients. This was of particular concern as there was a clear limit to the extent to which IFIs, including EBRD, could replace commercial bank trade finance – which totaled an estimated US$600 billion in 2008 in the EBRD region alone.

54. In this context, efforts to stabilize the financial sector were of the utmost importance. In cooperation with other IFIs and governments, EBRD had developed an initiative which supported bank balance sheets in its countries of operation. Under this initiative, a target of some € 3 billion in equity and debt finance in 2009 had already been approved by the EBRD.

55. In the medium- to long-term, as growth resumed, the extent of challenges to address supply and infrastructure constraints to trade was likely to differ across the region. Landlocked countries in Central Asia would continue to require special attention in terms of overcoming their natural geographical disadvantages. In this context, EBRD fully supported the on-going regional Aid-for-Trade needs assessment for SPECA countries (Central Asian countries plus Azerbaijan and Afghanistan) and the implementation of regional transport and electricity infrastructure projects in cooperation with other IFIs and bilateral donors.

56. The general investment climate was also important in the Aid-for-Trade discussion. In many EBRD countries, costs of trade were magnified by high levels of unofficial payments to customs officials. EBRD regularly monitored the investment climate through business surveys undertaken jointly with the World Bank, the results of which could also be integrated into the monitoring of Aid for Trade. He noted his belief that the Aid-for-Trade initiative would benefit from more engagement with the private sector, both in the context of national or regional reviews and in monitoring its effectiveness going forward. In closing Mr. Mirow assured participants that EBRD was committed to playing its part in the common effort to promote Aid for Trade.

57. Mr. Luis Alberto Moreno, President, Inter-American Development Bank (IaDB) , noted that the Second Global Review of Aid for Trade represented an important milestone to take stock of the gains made since 2007. The IaDB was very proud to be a partner of this initiative. Latin America and the Caribbean, together with the IaDB, had endorsed and supported this initiative since its inception as they understood the power of trade to change societies and the region. The Bank was committed to this objective and had invested in promoting the Aid-for-Trade initiative in its region through a range of projects and initiatives: supporting countries in the negotiation, implementation and administration of trade agreements; strengthening trade and investment promoting institutions; fostering private sector development for trade, in particular for small and vulnerable economies (SMEs); and Enhancing economic competitiveness and regional economic integration.

58. Political will to further bring down trade costs and trade barriers was needed to accompany these efforts. No time was more appropriate than this time of turbulence to boost this commitment. The global economic downturn had already accentuated the importance of trade and economic integration as engines of growth and development. Global trade was the best "antidote" to economic turbulence and the best "stimulus package" for national economies to get back to their growth paths.

59. The impact of the current crisis in Latin America and the Caribbean had largely been channeled through the slowdown of global trade, in particular affecting those countries that were more trade dependent. The region had been better prepared to face this crisis, with greater reserves, sound policies and a solid macroeconomic framework. However, the continuing contraction of exports, the widening of fiscal gaps and the increasing difficulties in the access to finance, were all contributing factors to the economic difficulties of the region. Trade had to continue to flow and expand.

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Protectionism as a policy reaction to the crisis would be a great error. The lesson of history was very clear on this point.

60. The case of Latin American and the Caribbean illustrated how trade integration had been the main driver not only for fostering development and growth, but also political cooperation and regional integration. The commitment of the region to multilateral trade had been complemented by more than 30 comprehensive free trade agreements (FTAs) from intra-regional partnerships to free trade alliances with other regions and countries around the world. They had opened new markets to channel the energy of the private sector. They had boosted competitiveness and innovation for the region delivering new economic opportunities. Most importantly, they had contributed to raise people out of poverty.

61. But much more had to be done. Trade had been liberalized and markets opened at an unprecedented speed in the past 20 years, but major challenges were still being faced. First, the "soft" costs of trading: the region had to address the increasing complexity of a trading system dominated by the proliferation of overlapping and complex rules. These could impose undue transaction costs on traders, investors and customs officials. A recent survey conducted by the IaDB revealed that companies in the region would receive important gains from the harmonization of rules across regional agreements, in particular in areas such as rules of origin, standards, customs procedures, etc.

62. Second, the "hard" costs of trading: the region had to focus its attention on transport costs and logistics. The IaDB estimated that the average ocean export freight rate from Latin America to the US market was almost 50 per cent higher than exporting the same good from Europe, controlling all relevant factors such as distance. Similarly, the impact of a 10 percent reduction in the freight rates would increase the volume of trade by a factor of 20 times higher than a similar reduction in tariffs. In particular, cross-border interventions offered an important opportunity for reducing logistical costs. It was estimated that delays in customs clearance in Latin America and the Caribbean increased transport costs by between five and 15 percent.

63. Third, the "information" costs of trading: The region had an urgent need to modernize some of its institutional trade architecture for export promotion and investment attraction. A forthcoming report by the IaDB, to be released in the autumn, showed the critical role that modern export promotion agencies could play in fostering commerce. They could support the private sector (in particular SMEs) to navigate the difficult path to become an exporter for the first time or to discover new niches and markets.

64. The Aid-for-Trade initiative was a key platform to move this agenda forward. And it was already yielding results. The national and regional Aid-for-Trade Reviews organized by the IaDB in collaboration with the WTO in Latin America and the Caribbean2 had shown that countries in the region were mainstreaming the Aid-for-Trade principles into their national and regional development strategies. Mr. Moreno was particularly pleased to report that the private sector had played a major role in the Aid-for-Trade dialogue, as he had seen in the Regional Review held in Jamaica.

65. The IaDB was committed to supporting national development strategies as well as region-wide initiatives conducive to a successful trade integration agenda. Mr. Moreno highlighted three areas that he considered of importance and which IaDB was supporting in the context of its Aid-for-Trade strategy.

66. First, continued support for both "soft" and "hard" regional infrastructure to ensure efficient trade and economic integration was essential. IaDB had implemented a wide range of programmes

2 National Review held in Lima, Peru on 3 March 2009; National Review held in San Pedro Sula, Honduras on 4 May 2009; and Latin America and Caribbean Regional Review held in Montego Bay, Jamaica on 7 and 8 May 2009.

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on, inter alia, trade facilitation, trade logistics, customs modernization, transport corridors, harmonization of regulatory standards and norms. The recent IaDB project "International Goods Transit System", in the context of the Mesoamerican Project, was an example of how delays at border crossings could be reduced, saving companies and consumers time and money. The average time to cross the border had been reduced from more than one hour to just eight minutes on average. Similar trade facilitation projects were being implemented in South America and the Caribbean.

67. Second, continuous strengthening of trade institutions to promote trade and investment, supporting the engagement of the region's private sector into the global market was needed. The IaDB had implemented innovative programmes, including, for example, for export promotion, attraction of foreign investment, private sector development (in particular assistance to SMEs), export clusters, and trade finance. Restoring trade finance was crucial in the present crisis. The IaDB had responded swiftly by expanding its Trade Finance Facilitation Program to US$1 billion. A new IaDB programme named "Export Plus" would allow small- and medium-enterprises to take advantage of enhanced market access through capacity building in the area of certification of standards, marketing, and management of trade logistics.

68. Third, new resources had to be mobilized and innovative partnerships promoted, including through a new "Aid-for-Trade Strategic Fund" which had been approved the previous year. The Aid-for-Trade Fund would enable IaDB to meet the growing demand and needs of our region. Some donors had already expressed their interest and commitment to this Fund, notably from the UK. The Aid-for-Trade Fund would be an opportunity to deepen, enhance, and break new ground in regional cooperation. The IaDB was committed to this objective, and was currently exploring new mechanisms to create incentives for enhancing South-South cooperation.

69. While initiatives such as Aid for Trade were critical, Mr. Moreno also believed that the protection of the multilateral trading system was paramount. The conclusion of the Doha Round was imperative for the Latin American and Caribbean region and the future of the world trading system. Scaling up initiatives on all of these fronts required substantial investment, and this was where the role of the Bank became relevant, working together with other organizations and the public and private sectors. In these times of economic crisis and uncertainty, trade needed to become a major anchor for growth and development. It called for reinforced trade and integration efforts.

70. Mr. Moreno strongly believed the Aid-for-Trade initiative was now more relevant than ever. He invited everyone to continue working together on this shared path with energy and resolve to promoting solid growth and sustainable development through trade.

71. Mr. Waleed Al-Wohaib, Chief Executive Officer, International Islamic Trade Finance Corporation (ITFC), recalled that the global economy was in deep recession. Food, fuel and financial crises had hit the world hard, especially the poor countries. World trade was projected to contract by nine per cent. In order to mitigate adverse impacts, the flow of goods and services had to be kept moving within and across regions. No country or region in the world had grown successfully without large expansion of its trade.

72. Trade had very special importance for the Islamic Development Bank (IDB) Group and its 56 member countries due to its critical role in poverty reduction, growth and development. The Organization of the Islamic Conference (OIC) had set a target to increase intra-OIC trade volumes from 15 per cent in 2005 to 20 per cent by 2015. In order to meet this challenge, the IDB Group had taken a number of strategic initiatives, in addition to establishing the International Islamic Trade Finance Corporation in 2006. A strategy with a road map for enhancing intra-OIC trade had been adopted in 2008. It had five major business lines: trade financing, trade promotion, trade facilitation, capacity building, and developing strategic commodities. This strategy would help achieve or even

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exceed the 20 per cent target. Intra-OIC trade had risen from around 14 per cent in 2004 to around 17 per cent in 2007 (from US$333 billion in 2004 to around US$421 billion in 2007).

73. IDB had been a pioneer among the multilateral development banks on trade financing. The Bank had made tremendous contributions and innovations in Islamic financing and had offered a viable model in this area. Various Islamic financial products such as Murabaha and Ijara, were asset-backed and were well suited for many markets. To date, the Group’s trade financing amounted to US$34 billion or close to 60 per cent of the Group’s lending volume. In 2008, ITFC trade financing was worth US$2.5 billion, of which 44 per cent had been allocated to the least-developed member countries. Under its trade cooperation and promotion programme, ITFC had supported more than 72 projects for trade promotion, capacity building and trade facilitation in 36 member countries.

74. The IDB Group had enhanced the scope of trade transactions among member countries through the Islamic Corporation for the Insurance of Investment and Export Credit that provided the Shari’ah compliant export credit and re-insurance facilities to exporters, banks, trade financiers and export credit agencies.

75. The IDB Group played a special role in the development of the private sector through ordinary operations and through the Islamic Corporation for Development (ICD) which provided a variety of financial products such as direct financing through equity participation, lines of financing to commercial banks and national development financing institutions, short-term corporate finance, asset management, structured financing, and advisory services to public and private companies. In 2008, ICD had approved US$347 million for 33 private sector operations. Overall, ICD had financed 132 projects in 28 member countries with assistance of over US$1 billion dollars.

76. Development of trade-related infrastructure, particularly for transport, communication and energy, was at the heart of the Bank’s assistance to its member countries. The Bank had financed more than 2,000 infrastructure and related operations worth US$17.5 billion. Examples included the East West (Trans-Sahelien) and North South (Trans Saharan) corridors and regional roads between Mauritania and Mali, and Djibouti and Somalia.

77. The Bank gave special importance and attention to productive capacity development through South-South cooperation. Over the past years, the Bank had created many success stories in capacity development. The ITFC had won the prestigious Euromoney Trade Finance Deal of the Year Award in 2008 for its financing operations in the cotton sector in Côte d'Ivoire. In 2008, ITFC had supported the cotton sector with US$121 million for operations mostly in sub-Saharan Africa. IDB was actively supporting the food sector. For example, in response to the food crisis, the IDB Group had pledged a five-year assistance package of US$1.5 billion through its Jeddah Declaration Initiative on Food Security adopted in 2008. The initiative supported member countries, particularly the least-developed ones, in strengthening their food security and revitalizing their agriculture sector. Assistance included US$250 million for financing trade in agricultural inputs and US$200 million for trade and private sector development. Under the Initiative, since June 2008, the Bank had approved US$442 million including US$52 million by the ITFC, representing over 29 per cent of the total pledged amount.

78. The IDB Group’s new Vision 2020 – called A Vision for Human Dignity – and the Group’s new thematic strategy for 2009-2011 prioritized five key areas for poverty reduction, with business and trade development as core elements: (i) Comprehensive human development; (ii) Infrastructure development with emphasis on transport, energy and information and communication technology; (iii) Regional economic cooperation and integration; (iv) Productive capacity development, and (v) Private sector development.

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79. In 2009, as part of its response to assist member countries address the challenges of the global financial crisis, the IDB Group was scaling-up its operations by increasing its annual growth rate from 15 per cent to 30 per cent, resulting in an additional US$2.5 billion over the period 2009-2011.

80. ITFC was offering its full support to the preparation of the Aid-for-Trade Roadmap for the United Nations Special Program for the Economies of Central Asia and Afghanistan (SPECA) Region. A preparatory meeting had been held in Bishkek, Kyrgyz Republic in March 2009 which had agreed to articulate regional and national priorities on Aid for Trade with special reference to the challenges and prospects during and after the global financial crisis. In 2010, ITFC was planning to organize an Expert Meeting in Bishkek, Kyrgyz Republic, and a Ministerial Meeting in Baku, Azerbaijan, in support of the Aid-for-Trade Roadmap for the SPECA Region.

81. ITFC was planning to launch an Aid-for-Trade initiative for the Economic and Social Commission for West Asia (ESCWA) Region and would be pleased to work in partnership with all stakeholders. ITFC would also be pleased to partner similar initiatives in Africa.

82. In conclusion, Mr. Al-Wohaib reiterated the overriding importance the IDB Group attached to trade promotion, and at the same time expressed his readiness to cooperate with other international financial institutions and partners on Aid for Trade, with the objective of scaling up trade-related infrastructure financing and capacity development.

IV. SESSION 3: AID FOR TRADE – ASSESSING IMPLEMENTATION

1. Opening the session, the Moderator, Mr.   Jon Snow, Channel Four News , noted that the EC and its member States were on track to meet their Hong Kong pledges on Aid for Trade ahead of schedule. The Commission had published an Aid-for-Trade Strategy in 2007 and most member States had activities in the Aid-for-Trade area. Total European Union (EU) Aid for Trade had reached €7.17 billion in 2007, with Africa the region receiving the highest proportion at about 44 per cent. Turning to Commissioner Louis Michel of the European Commission, Mr. Snow asked him where he thought the EC could do more and how the global downturn had changed the outlook?

2. In reply, Mr. Louis Michel, Commissioner, European Commision (EC), noted his expectation that the commitments that the EC had undertaken on Aid for Trade would be respected. It would not be easy, however. Member States had to be convinced to respect their commitments and a lot of pressure had to be brought to bear. Commissioner Michel had great hope, not least because in 2008 the figures showed very clearly that the EC was moving closer to its ODA target.

3. In 2007, the EU had provided €7.17 billion in Aid-for-Trade funding, just for that one year. In comparison, expenditure for the period 2001-2005 was €5.29 billion. There had therefore been a tremendous increase. The EU was focusing its attention on regional integration, and offering comprehensive support to have Economic Partnership Agreements (EPAs) based on regional programmes. Regional funding had been doubled in support of the EPAs, which should increase considerably the funds available to liberalize markets.

4. The EU had also prioritized infrastructure. Economic development was impossible without infrastructure. Looking at Africa, communications infrastructure, ports, airports and roads, particularly for landlocked countries were lacking. An infrastructure fund had been established with the European Investment Bank to address this area.

5. Another major focal point of the EC's Aid for Trade was policy development. Difficult political decisions were sometimes necessary. In the EPA context, it was clear that if one got rid of taxes at the border, the resources generated had to be replaced with some type of compensatory mechanism. It was very difficult for partners to do that, but the EC had offered aid in this area.

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Commissioner Michel also highlighted that, particularly in Africa, the lack of clear governance caused problems for investors.

6. The Moderator noted that the UK had been badly affected by the economic crisis. The Prime Minister's personal commitment to aid in general and to Aid for Trade was very strong, but as a former Chancellor of the Exchequer, he also knew he had to balance the books. Jon Snow asked Minister Gareth Thomas if the UK could keep its Aid-for-Trade pledges in the current economic crisis and how it could justify expenditure to its own tax payers?

7. In reply, Minister Thomas stated that the UK intended to follow through on the commitments it had made on Aid for Trade. A new White Paper on Development would be published which would include a very substantial commitment on spending on growth and trade, the bulk of which could be counted as Aid for Trade. The Prime Minister's attendance at the G8 Summit would also be used to generate momentum behind Aid for Trade.

8. Minister Thomas noted his agreement with Commissioner Michel on the importance of trade to the global economic recovery. His ambition was to see a much more inclusive form of globalization which had at its heart not only a reduction in tariffs and subsidies by the richest nations, and key to that would be getting an agreement in the Doha Round. Aid-for-Trade resources were required to deal with some of the infrastructure problems which were making trading difficult. The UK was also going to be following through on commitments made in the G20 in terms of global trade finance and announcing significant financial commitment to the IFC's Global Trade Liquidity Program.

9. The importance of the practical implementation of Aid-for-Trade projects was also alluded to by Minister Thomas. He referred to the commitments made in Lusaka in April 2009 at the North-South Corridor Conference. Commitments had been made on investment in roads, ports, railways and harmonized border crossings. These engagements were a good example which could be replicated in other corridor programmes. Minister Thomas noted his keen interest to help other parts of Africa see further progress on their corridor programmes.

10. Returning to Commissioner Michel, the Moderator remarked that the Commissioner had a lot of people to satisfy in his position: the European Parliament, the Court of Auditors and, above all, European public opinion. He asked Commissioner Michel how confident he was that he could carry these people with him in this commitment to Aid for Trade?

11. Commissioner Michel replied that there was a basic consensus on the fact that there would be no economic development if there was no economic prosperity. If one compared what one per cent economic growth meant for a developing country relative to the receipt of ODA, it was clear that the impact of economic growth was more beneficial. The problem lay in the difference between what the major donors were saying on the one hand, and what they were actually doing on the other hand. With the exception of Spain and the UK, who had made major efforts despite difficult national situations, most other countries were extremely reticent. Commissioner Michel gave the example of the efforts he had made to get the quick impact food facility programme approved. This had taken a year of discussion and had been ultimately in vain. He concluded that there was a lack of political will among major donors. Emerging developing countries also had to become active partners in Aid for Trade.

12. The Moderator highlighted that Africa had received US$9.5 billion in Aid for Trade in 2007. This figure was US$4.1 billion higher than in 2007. He asked what impact the funds were having on Africa's trade performance?

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13. In reply, Commissioner Elizabeth Tankeu (African Union Commission), stated that the tax payers of the North and South should be reassured. The African Union (AU) had seen tangible results. In macro-economic terms, growth rates before the crisis had been high and some countries were close to meeting the MDGs. However, the financial crisis had been a set back for many African countries.

14. Growth in Aid for Trade to Africa was welcome, but not enough yet to meet Africa's needs. Africa remained very vulnerable to structural disruption, faced internal problems and external upheavals. There, a lack of infrastructure and high commodity dependence continued. A further increase in Aid-for-Trade to Africa was necessary if the continent was going to achieve its integration and economic development objectives. Africa had to be opened up in a positive sense. Many African LDCs were landlocked and they needed to be opened up to the outside world if their situation was to improve. The North-South Corridor was a welcome development and further such corridors were needed, such as the one between Djibouti and Addis Ababa, or that linking Benin and Burkina Faso.

15. On the topic of boosting productive capacity, Commissioner Tankeu noted that African Heads of State had recently organized a summit on industrial development. Africa needed to take more advantage of what it had on the ground and make better use of its raw materials in a way that would help Africa to export manufactured goods to world markets. This was the best way to help Africa eradicate poverty, but this could not be achieved with aid alone. She hoped that Aid for Trade would support Africa in its efforts to boost productive capacity.

16. Responding to Commissioner Louis Michel's point that the political environment did not always encourage investors, Commissioner Tankeu said that the reason was because there were too many difficulties facing some countries. She drew attention also to the fact that investors, and the private sector in particular, had a major role to play in helping countries in Africa improve their political environment. If the private sector got more involved in Africa's economic development, it would be very helpful in improving the political climate. If young people had no jobs, there was always going to be political tension. It was only with economic development and productive structures that Africa would be able to tackle these problems. Economic development could not be achieved with aid alone. It was the development of Africa's productive capacities and engagement in trade which would help Africa to achieve prosperity.

17. Turning to Mr. Franklin Moore of USAID, the Moderator speculated if US commitment to Aid for Trade would remain constant in the financial crisis and asked if current funding levels could be maintained if taxpayers were not sure why this was necessary.

18. In reply, Mr. Moore, Deputy Assistant Administrator, USAID, argued that Americans, like the Obama Administration, realized that trade was a key component of economic growth – and a key component of US economic growth. It meant that trading partners had to be able to trade. It was the President's desire that the US should expand its development assistance and this had been welcomed by the US public. The US was very committed to the concept of economic growth.

19. The US looked at Aid for Trade in three main areas: capacity building; organizational innovation; and infrastructure. All three were critical to create local trading partners for countries and their neighbours in the developing world and for long distance trade. The US tended to emphasize grants rather than loans and allocated funding based on an expression of priorities. If trade-related needs were among the priorities within a country, then that was picked up in conversations with USAID Missions. The Millennium Challenge Cooperation (MCC) provided significant financing for trade, mostly for infrastructure. The US had participated in the North-South Corridor Conference and was actively looking at similar projects in other parts of Africa, particularly in West Africa.

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20. In reply to a question on Japan's Aid-for-Trade strategy, Mr. Shintaro Ito, State Secretary for Foreign Affairs, recalled that in 2005 Japan had announced the Development Initiative for Trade. Over the following three years, Japan had met all its commitments under the Initiative by doubling ODA for Africa at the Tokyo International Conference on African Development (TICAD IV) and through the "One Village, One Product Campaign" which aimed to support developing countries' efforts to enter the Japanese market. These Japanese initiatives had been highly appreciated by partners countries.

21. At the Second Global Review meeting, Japan intended to reaffirm its commitment to Aid for Trade. Mr. Ito announced the "Development Initiative for Trade 2009" as Japan's new strategy for Aid for Trade. Under this Initiative, Japan would provide US$12 billion through bilateral assistance for trade-related projects from 2009 to 2011. Japan would also provide technical assistance over the same period for 40,000 people in the field of trade-related activities. In line with Japan's efforts to keep trade open, Japan would initiate an overall review of the Generalized System of Preferences. Japan would also implement its commitment to trade finance, as promised at the G20 Summit and on other occasions, because of the need to facilitate exports from developing countries.

22. Japan would implement this new Initiative through a tailor-made approach and it would pay due consideration to country ownership. Attention would be given to the socio-economic conditions of each developing country, including poverty, environment and gender aspects, as well as the concept of the "right place and the right product" which was related to Japan's "One Village, One Product Campaign".

23. Japan would intensify its efforts on Aid for Trade through this new Initiative. However, in order to enlarge developing countries' trade volumes, Mr. Ito hoped there would be a conclusion to the Doha Round. A successful outcome would bring benefits to all member countries, in particular to developing members. He stressed the synergy between the conclusion of the Doha Round and the promotion of Aid for Trade.

24. Commissioner Michel clarified that his comments on the reticence of some member States to meet their commitments did not relate to the major performers, countries such as Sweden, Netherlands, Denmark, Luxembourg, Belgium – all of whom were making efforts. Several countries were beyond 0.7 per cent of GDP for their ODA and it was not those countries to which he was referring. He also noted that EU development policy was grant based.

25. In the discussion which followed, the representative of Sweden thanked the WTO, OECD and other involved agencies for their excellent work in driving the Aid-for-Trade agenda forward. Aid for Trade was a highly priority of the Swedish Government. Sweden was a good example of the crucial role that trade could play to sustain economic growth. History told that openness to trade was an effective means to generate economic growth. By overcoming structural limitations and weak capacity to produce and compete, developing countries could make further use of the opportunities inherent in trade, thereby increasing resources for poverty reduction. The challenge was to provide Aid for Trade in a manner that generated pro-poor growth. Since the incidence of poverty was country-specific, any pro-poor policy, including trade policy and Aid-for-Trade interventions, had first to identify the binding constraints to trade, who the poor were, where they lived, how they earned their livelihoods, and what constrained them from participating in growth-generating economic activities.

26. Since the First Global Review, progress had been made in terms of raising awareness on the importance of Aid for Trade, identifying binding constraints to trade and up-scaling resources. The spotlight effect was working. Trade was increasingly found in partner countries' national development plans or Poverty Reduction Strategy papers (PRSPs). There was an increased focus on regional initiatives and on improved monitoring and reporting on Aid-for-Trade flows. Lastly, the

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Enhanced Integrated Framework had been launched and funding secured at a conference in Stockholm in September 2007.

27. The EU Aid-for-Trade Strategy adopted in 2007 confirmed the EU's strong commitment to Aid for Trade, as manifested in the pledge made in 2005 to commit €2 billion annually to trade-related assistance by 2010. Sweden's own trade-related assistance had tripled since the beginning of the Doha Development Agenda. Priority areas for Sweden's trade-related assistance were standards (SPS/TBT), support related to the European Partnerships Agreements (EPAs) with the African-Caribbean Pacific (ACP) countries, trade and climate change, and trade procedures.

28. Sweden also faced challenges as a national donor. Time and energy had been spent in reviewing its systems for policy development and for delivering development assistance to improve their efficiency. This included, among other things, going through every country's specific and regional development strategy to see how Aid for Trade could be addressed. The review had to be done in consultation with the partner countries and/or regions concerned.

29. Sweden also underlined some focus areas to secure efficient implementation of Aid for Trade, particularly in light of the global economic downturn. These priority areas were (i) strengthened country ownership of Aid for Trade, (ii) strengthened pro-poor focus to Aid for Trade, and (iii) the coherence objective which was of particular concern as a way to interlock aid policy with trade policy in a coherent strategy for poverty reduction. Finally, the representative of Sweden hoped that in future trade would be a development sector as natural and self-evident as education and health was today.

30. The representative of Spain noted that Spain would be taking over the Presidency of the EU after Sweden. This meant another friend for Aid for Trade in the first six months of 2010! He noted the wide reaching consensus on the ability of trade to be one of the driving forces behind economic recovery. This was perfectly in line with the approach and the principles taken by Spain with respect to Aid for Trade. Donors had a responsibility to maintain and respect commitments and beneficiaries had a responsibility to integrate trade into their national development strategies. There was a shared responsibility to better identify priorities and needs. The private sector also had a fundamental role to play.

31. Noting that Commissioner Michel had mentioned compliance with commitments by the EC and by its member States, he said that Spain had increased its trade-related technical assistance to reach €81 million in 2007. Spain aimed to reach the 0.7 per cent target of aid as part of GDP by 2012 and hoped that additional funding for Aid for Trade would become available since it was a basic priority. Just meeting commitments on figures was not enough. It was necessary to boost efficiency.

32. The representative of France reassured the meeting of his government's commitment to Aid for Trade. France had developed an Aid-for-Trade strategy focusing on regional integration with support for regional trade development and help for market development at national, regional and global level. France's Aid-for-Trade expenditure would increase to reach €850 million per year starting in 2010, a 50 per cent increase compared with the 2002-2005 baseline.

33. The representative of Ecuador noted that sometimes the problem was a lack of political will to meet commitments. Political will was what would turn commitments into tangible programmes on the ground. He noted that, while trade was a very important component of economic development, it was not the only one and was just one instrument along with others. He expressed concern that Aid for Trade was something that might have to be reimbursed – tantamount to setting conditions and earmarking. Earmarking was not always in the interests of the beneficiary countries. Many countries had national economic development, and economic and trade growth programmes on which great

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emphasis was laid on boosting trade. Earmarked programmes or tying to set conditions was not necessarily in line with national priorities. He urged that conditionality should be avoided.

34. Referring back to the IMF intervention, he argued that the IMF was applying pro-cyclical policies. The IMF approved of the stimulus packages that most developed countries had adopted, but developing countries were in a different situation. Loans which could be granted by the developed world or by the IMF tended to be granted on the basis of a pro-cyclical policy which was not always of assistance.

35. In reply to a question from the Moderator on how the United Nations Economic Commission for Africa (UNECA) was monitoring the impact of Aid for Trade, Mr. Abdoulie Janneh, Executive Secretary, UNECA, noted that only three per cent of global trade was with Africa and only 10 per cent of Africa's total trade was with itself.. From previous interventions, it was clear that significant flows of resources were going to Africa. When African nations had met in Dar es Salaam in 2007, the message that had emerged was that for Aid for Trade to be meaningful resources on infrastructure, on trade facilitation and on standards were needed. Resources in these areas would really improve Africa's competitiveness and encourage export diversification. The resources were now becoming available.

36. There were many ways to measure impact. One was to see if inter-African trade was improving or if for special groups of African countries – for example, LDCs or landlocked countries –trading costs were falling or the trading time between landlocked countries and coastal countries was being reduced. These were some of the areas UNECA wanted to examine. UNECA had prepared a report on the supply and demand of Aid for Trade for Africa in which the distribution of Aid for Trade had been examined. To assess the impact, indicators had been examined which would constitute the measurements of demand. UNECA would continue to work on this area, together with the WTO Secretariat and the AfDB. UNECA was represented at the sub-regional level in Africa and it would work together with the RECs and others to look at impact. In conclusion, it was still early days, but started credible work was underway and Mr. Janneh hoped that by the time of the next Review something more concrete would have emerged.

37. The Moderator picked up on the theme of standards, noting that the United Nations Industrial Development Organization (UNIDO) had done a lot of work on standards compliance through its three C's approach – compete, conform, connect.

38. In reply, Mr. Kandeh Yumkella, Director-General, UNIDO, noted that what a country produced mattered a lot. If Aid for Trade was going to help Burkina Faso and Mali sell more cotton, it had to help both countries (and other African countries) to produce higher value products that they could sell. How Aid for Trade could help Africa diversify its production base was another issue Assuming that the cotton countries could in fact produce higher value products or continue to expand their production of commodities, would these products meet international standards? This was an area where UNIDO had focused attention during the past 15 years.

39. Various standards were not imposed by governments, but by large private sector entities. To get a product on the shelf at Tesco or Carrefour, food safety and other standards had to be met. In West Africa, UNIDO had focused its help on establishing institutional infrastructure to help countries meet these standards. UNIDO had upgraded laboratories and testing procedures, and conducted enterprise audits to see whether the process itself conformed to certain standards to encourage market access. Significant support had been received from the European Commission, France, Switzerland and Norway. There was impact, but efforts needed to be scaled up. So far, only some 50 laboratories had been upgraded. There were many more that needed assistance, across different sectors.

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40. Another dimension was enterprise upgrading. Assuming that a country had an opportunity to supply Tesco, how could the company be helped to improve its technology or management practices to be able to be part of that value chain. The initial programme that the EC had funded, had achieved results with about 80 companies. UNIDO's ambition under the EPA was to scale that up to 3,000 companies with the support of the ECOWAS (Economic Community of West African States) Commission and WAEMU (West African Economic and Monetary Union). UNIDO had set up standards infrastructure and accreditation systems and it was helping companies take advantage of these opportunities. Mr. Yumkella made reference to a recent article in the Financial Times about traceability and a new technical standard: the carbon footprint. He hoped it would not be a new technical barrier to trade at the expense of poor countries.

41. To help poor countries diversify UNIDO had to do what the African Growth and Opportunity Act (AGOA) had done. This was to allow African countries – Lesotho and others – to be able to source inputs from others, finish goods and then export them so that countries did not have to specialize in the production of the whole product. They could specialize in components. However, if other trading arrangements were too strict on rules of origin this would kill the initiative on regional integration. In AGOA, what had made a difference was that there was some flexibility in these rules of origin. Director-General Yumkella hoped that new trade agreements would allow African countries to produce certain components of a value chain.

42. Replying to a question about ECOWAS's development strategy and the role that Aid for Trade could play in its achievement, Mohamed Ibn Chambas, President, ECOWAS Commission, outlined the Vision 2020 of a borderless West African region. In the region, people would live in peace and democracy, able to move about freely and to take advantage of the huge resources, human and natural, with which the region was endowed. Aid for Trade could help realize that vision in many ways. First and foremost, for people to be able to move about and to do legitimate business they had to have physical infrastructure. This meant scaling up building regional cross-border infrastructure. A lot of support was coming from the EU, World Bank, AfDB and other bilateral partners to address these infrastructural constraints. There was also a need to ensure the right policy environment to facilitate trade.

43. Cross-border trade in West Africa was averaging only about 15 per cent. There was tremendous potential to increase trade, with benefits for all This called for capacity building in member states but also at regional level, for trade policy formulation, and for negotiations. Aid for Trade was not only designed to help improve and increase regional trade but also the region's participation in global world trade. At that regional level, improvements were needed both in member states and in regional level capacity for trade policy formulation. Harmonization of policies, standardization, and trade negotiation capacity were all important areas where assistance should be provided.

44. In the context of the EPA, discussions were not only focusing on market access, but also the capacity of the region to increase production and to diversify production. In that context, there was a very useful discussion going on with the EU on the development dimension. He hoped that whatever regional development programme was designed would permit other partners to come on-board. This was not only something that concerned Europe, but also other development partners. It would help ECOWAS to increase its regional capacity, to become more competitive, to diversify, to add value and be less exposed to the fluctuations in global trade.

45. Mr. Franklin Moore added that in Africa, four global competitiveness hubs had been established by USAID – in Gaborone for Southern Africa, in Kenya for East and Central Africa, and two in West Africa in Dakar and in Accra. For ECOWAS, the trade hub examined regional trade issues and worked not only with governments, but with civil society organizations and private enterprise. In the MCC compact countries in West Africa (Benin, Burkina Faso, Cape Verde, Ghana,

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and Mali) approximately US$2billion worth of development had been engaged, much of which was in hard infrastructure. For example, there was a corridor from Bamako, Mali, which went through Ougadougou, Burkina Faso to the coast both in Ghana and Togo. The US was looking at working there, in particular on food security and the movement of staple crops.

46. Director-General Yumkella noted that he had heard a lot about infrastructure but not much about access to energy. He opined that energy infrastructure had to be improved otherwise industries in these countries would not be competitive. In Burkina Faso, the cost of power was between 24-35 cents per kilowatt hour. This made its industries uncompetitive, even if all the other infrastructure was in place. Energy access was crucial.

47. Mr.   Petko Draganov, Deputy Secretary-General , United Nations Committee on Trade and Development (UNCTAD), recalled that the mandate of UNCTAD was to help developing countries make the most of their trade, investment and development opportunities and participate beneficially in the global economy. UNCTAD tried to focus its efforts where they were needed the most and this was in LDCs. Most LDCs were in Africa: 33 out of 49. UNCTAD's mandate fell within the definition of Aid for Trade; UNCTAD had been doing it for the last 45 years.

48. UNCTAD offered research and analysis, and help for acceding countries to the WTO. It also provided factual reports and analytical work so that developing countries made the right choices. Technical assistance, such as the ASYCUDA (Automated System for Customs Data) programme which existed in more than 90 countries, had been known to help raise revenues up to 70  per cent. He underlined the importance of donor countries sticking to their pledges and that recipient countries were better organized to propose better projects not only at the national but also at the regional level.

49. The representative of Cambodia noted that his country had hosted two key meetings, an LDC Ministerial with UNIDO3, and another with the AsDB and WTO on Aid for Trade4. The strong message which emerged from these two meetings was that Aid for Trade was a must for all the developing countries, especially LDCs. It was very important that all stakeholders played their part, by developing ownership and by mainstreaming trade policies into poverty reduction and national development strategies. By putting their own houses in order, developing countries would also be creating the best environment for Aid-for-Trade resources to flow. There was a need for more assistance to developing countries to increase their supply-side capacity. Minister Prasidh commended donors on keeping to their 2005 Hong Kong Ministerial Conference pledges, but noted that more assistance needed to come at this difficult time.

50. The representative of Jamaica noted that Jamaica fully supported Aid for Trade and had been pleased to host the Second Regional Review on Aid for Trade for Latin America and the Caribbean in Montego Bay in May 2009. Ministers, senior officials, and private sector representatives from across the region, as well as trade related and developmental organizations had met to assess and confirm the region's Aid-for-Trade priorities. It was generally agreed that the meeting had been a success and given added urgency by the global financial and economic crises. The discussions had been substantive and interactive, and included issues such as the challenges faced by countries in the area of trade development, translating trade agreements into actual market penetration and trade liberalization adjustment issues. Other subjects discussed included the important issue of preference erosion, export-import strategies, issues arising from trade facilitation and infrastructure, the constraints faced by the private sector, as well as the new and non-traditional areas being pursued by the private sector. There were also discussions on specific Aid-for-Trade initiatives which had achieved particular success.

3 LDC Ministerial Conference, Siem Reap, Cambodia, 19-20 November 2008.4 Regional Meeting for ASEAN members states held in Siem Reap, Cambodia on 28-29 May 2009.

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51. The Regional Review on Aid for Trade for Latin America and the Caribbean had proved very useful and had heightened interest in Aid for Trade, both at the national and regional levels. It had also provided new impetus to regional cooperation in the area of Aid for Trade. In that regard, a decision had been taken by the Caribbean Community to accelerate, as a priority, the preparation of a Caribbean Aid-for-Trade strategy, the objective of which was to develop a holistic and comprehensive approach to competitiveness, adjustment and trade development. The region would also improve its monitoring capabilities, including the creation of new mechanisms to more effectively monitor Aid-for-Trade flows, and the effectiveness and developmental impact of Aid-for-Trade programmes. In conclusion, the representative of Jamaica noted that Aid for Trade was now a reality. All involved recognised the enormous potential of Aid for Trade and had a vested interest in making it a success.

52. The representative of Zambia stated that it had been privilege to host the High-Level resource mobilization conference on the North-South Corridor and concurrently the regional Aid-for-Trade Review on 6-7 April 2009. The North-South Corridor was a joint COMESA-EAC-SADC pilot Aid-for-Trade initiative emanating from the October 2008 Tripartite Summit. It cut across Botswana, the Democratic Republic of Congo, Malawi, Mozambique, South Africa, Tanzania, Zambia, and Zimbabwe. This Project had been designed, based on a holistic, integrated and sequential approach, to cover infrastructure development relating to roads, railway, border facilities and procedures, weigh bridges and energy, among others. The objective of the project was to reduce the time and hence the cost of moving goods within and beyond the region in order to enhance competitiveness.

53. The Conference had brought together the Presidents of Zambia, Kenya, South Africa and Uganda. A wide array of representatives from the private sector, public sector organizations, regional bodies, international organizations as well as bilateral and multilateral cooperating partners had also attended. The Conference had resulted in total pledges amounting to over US$1.3 billion. An additional US$1.5 billion had also been secured from the Development Bank of Southern Africa. An institutional framework to start implementing the specific projects was being put in place. The region looked forward to the successful implementation of this project.

54. The representative of China expressed her appreciation to the WTO and OECD for the excellent preparation of the Review. It had come at an opportune time when the world was experiencing a crisis unprecedented since the 1930s in which developing countries, particularly the least-developed, had been the hardest hit. The three regional reviews in which China had participated (Zambia, Jamaica, and Cambodia) confirmed the WTO Aid-for-Trade initiative as a success story. It was also encouraging to see that awareness had been raised and the level of commitment to Aid for Trade from the international community had been increased. One topic was how South-South partners could become further engaged in the Aid-for-Trade initiative. She announced that on top of its first contribution last year, the Chinese Government had decided to make a further contribution to the WTO within the framework of the Aid-for-Trade initiative. China would continue to increase its level of commitment through both bilateral and multilateral channels.

55. The representative of Switzerland began his comments with the slogan: "Implementation! Implementation! Implementation!". The test for the Aid-for-Trade initiative lay in its implementation. He noted his pleasure at the very interesting examples from partner countries and multilateral institutions, in particular in the standards area. Without standards compliance, it was impossible to transfer goods and services from one place to another. The standards area was complex and was deserving of a lot of attention. He recommended that donors should come together in order to implement programmes, as should international organizations. Switzerland strongly believed that Aid for Trade would only achieve concrete and sustainable outcomes if development assistance was aligned with national priorities that resulted from a solid consensus-building process among local stakeholders. In this regard, Switzerland considered that the Enhanced Integrated Framework and complementary implementation schemes such as the UN CEB Inter-Agency Cluster on Trade and Productive Capacity could make a real difference by providing a firm foundation for the

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implementation of Aid for Trade on the ground. He finished with a further call to implement, implement, implement!

56. The representative of Mali noted the support offered by the World Bank with respect to mango exports and thanked the Netherlands for building a processing centre. On the topic of the contribution that could be made by the international private sector, he noted that Mali was a poor country in the real meaning of the word. It did not have natural resources which would draw investors, like other countries, and was a landlocked country with seven borders.

57. Commissioner Michel replied to a comment from the Moderator about whether or not the drive to halt climate change could result in new barriers to trade, particular carbon footprint. What was really at stake in the fight against climate change and in attempts to mitigate was to know what the international community was going to do. The real problem was going to be if money was going to be taken out of the regular development budget to fight against climate change. If so, another disaster would be added on top of the existing one. The poorest countries were not responsible for climate change; responsibility lay with the wealthy countries. Therefore, what was at stake here was to know whether or not there was sufficient political will – and honesty too – among the leaders of the wealthy countries to admit that and to find the additional resources needed to fight against climate change.

58. Wrapping up the session, the Moderator stated that it was very clear that Aid for Trade was alive and well, but that the Swiss had still needed to call to implement, implement, implement on all sides. Eyes had to be kept very clearly on what was actually being done, and whether or not what was being talked about as being done was actually being done.

V. SESSION 4: AID FOR TRADE - PRIVATE SECTOR PARTNERSHIP FOR GROWTH

1. The Moderator, Mrs.   Patricia Francis, Executive Director, International Trade Centre (ITC) , introduced the Session and explained that it would start with a discussion on what was happening in the financial sector and what had been happening in the Asian region, followed by a discussion on past success stories, looking at the critical success factors for moving Aid for Trade forward. She addressed her first question to Peter Jones and asked him to provide information on what challenges Africa was facing with regard to resources for trade finance and whether those resources were being diverted to other bigger players?

2. Mr. Peter Jones, Chief Executive Officer, Africa Trade Insurance Agency (ATI) , said that the existing problem of access to trade finance in Africa, and particularly in sub-Saharan Africa, had been made worse by the current economic crisis, and by the shortage of US dollar liquidity. The result was an asymmetrical risk allocation in both security and the interest margin on borrowing, particularly by small- and medium-sized enterprises (SMEs) exporters within Africa who were doubly hit because they were required to raise significant amounts of security in order to get any access to funding at all, and also to pay very high margins. SMEs were also forced to take what was called "open account" risk on the people to whom they were selling. This meant that when they bought in goods, they were being forced to pay cash or put up letters of credit, and when they sold, they were forced to take the credit risk of the buyer with no credit protection at all. This was a complete reversal of what happened in the developed world. Adding to the problem was that, depending on the African country involved, this resulted in a heavy concentration of industry in the form of exports and a lack of diversification. There was significant risk diversification if a number of African countries were brought together and one of the key reasons why regional organizations such as the African Trade Insurance Agency had been set up was to bring countries together to enable them to benefit from the risk diversification that came from being within a regional grouping.

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3. Despite the information about banks and their trade finance operations supporting global trade, he said that when commercial banks talked about focusing on trade finance they were actually concentrating on their traditional markets (Latin America, Eastern Europe, Russia, Asia, China), and not on sub-Saharan Africa. Africa tended to fall off the radar screen, particularly in times of economic crisis. A solution to this problem had to be found through the involvement of and support from the private sector. The Africa Trade Insurance Agency focused on developing trade and investment finance within Africa and supporting African companies' export so that they could compete globally and had both private and public sector members and investors. In order to provide the capacity and support that was required to bring investment to Africa and to support regional and international trade from Africa on a global basis, ATI also partnered with other risk bearing insurance institutions such as Zurich Insurance, Lloyds of London, and Ace Insurance of Bermuda. This could not be done without private sector support. Even though ATI was a single A-rated entity and could effectively mitigate the risk of buyers in Africa and buyers outside Africa, it could not solve the liquidity problem. It was critical that that issue was dealt with immediately. It was a long-standing issue and, hopefully, out of the crisis would come a permanent solution.

4. Both pre- and export finance were needed to assist African companies to finance the production of goods that they were going to sell overseas and then to fund it while the goods were being sold on an "open account" – where the buyer would only pay, for example, after 30, 60, or 100 days. The International Finance Corporation's (IFC) global trade finance programme which supported LDCs only supported imports into developing countries and so did not really address this issue. The recently-launched IFC and African Development Bank, Global Trade Liquidity Program, had the potential to change this, particularly through its refinancing window for export credit agencies. Since there were very few export credit agencies within Africa the risk was that a lot of this liquidity might be focused on countries and regions outside Africa. ATI was therefore exploring both with IFC and with the African Development Bank to see how ATI could act as a conduit for getting funding to its insured exporters. In effect, creating a self-liquidating facility meant that ATI would provide the financing but would already be taking the risk on the credit of the buyer of the goods. If the buyer paid on time, the facility revolved and was refinanced. If the buyer did not, ITA would be required to pay a claim and it would be refinanced. This resulted in a very significant gearing effect from the recycling of resources which were being directed to where they were required, namely the SMEs exporting from Africa.

5. He concluded by saying that the key challenge to the successful deployment of these programmes would be to support African exports and not just imports into the continent. Discussions had been held with commercial banks and with other development institutions, particularly within the Middle East, to see if they would be interested in providing support. In order to reach this objective, partnerships would be needed with regional institutions, private sector banks, and also the private- and public-sector insurers.

6. The Moderator then addressed a second question to Mr. Jones concerning whether, in terms of the capacity of the private sector to produce bankable documents, there was a need for technical assistance to be given to some of the institutions that supported the private sector to ensure that the quality of the requests coming to financial institutions was of a standard to actually be bankable.

7. In reply, Mr. Jones said that, as a single A-rated agency, ITA reinsured on partnerships with other A- or AA-rated insurers and that from the point of view of that quality there was not a problem. The difficulty and challenge lay in liquidity and funding.

8. The Moderator then referred to the fact that immediately prior to the recently-held G20 Summit there had been a call for about US$100-300 billion needed for trade finance. She asked Toru Matsutani to provide a situation analysis on what the Tokyo Mitsubishi Bank had actually seen happening as far as the financial crisis was concerned?

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9. Mr. Toru Masutani, Head of Export Credit Agencies, Commodities and Trade Finance, Tokyo Mitsubishi Bank (TMB), said that a figure of US$200 billion was probably in line with what was going on in the world. From the point of view of individual business transactions, however, that amount was not necessary at this stage because all transactions had been covered. The announcement made at the G20 meeting had nevertheless had a very good stabilizing effect on the financial market. From the point of view of commercial banks, there was a risk-taking ability and, of course, financial costs were increasing. As a result, banks' ability to lend as they used to be able to do had become more limited.

10. The economic crisis had impacted the financial market in two main ways. One was the direct impact of the crisis to the financial institutions, in other words the market loss of derivative products. The second aspect concerned emerging markets. Reduced risk-taking ability and weakened capital market had a significant impact on banks' ability to lend to the emerging markets. The effect was not the same in all countries or for all borrowers. Borrowers were seeking alternatives. Exporters, too, were now much more at risk and, to hedge the risk of collecting funds, were asking the banks (including TMB) to issue or confirm letters of credit.

11. The Tokyo Mitsubishi Bank had branches in over 40 countries and had more than 3,000 corresponding banks around the world. It also had over 300 credit lines to banks around the world so therefore had been very active on a global basis, especially in Asia, the Middle East, Turkey, and some countries in Africa. One big change – before and after the crisis – was that all TMB's commitment lines had been fully utilized. Its real lending exposure had therefore increased by almost twenty per cent. On the other hand, not all needs could be met because TMB had its own constraints vis-à-vis its balance sheet. That was why, since 2008, it had sought an opportunity to team up with multilaterals banks and export credit agencies.

12. In October 2008, the TMB had signed a Memorandum of Understanding (MoU) with the IFC which included trade finance, and in February 2009 it had signed a similar MoU with the AsDB to promote trade finance, utilizing the trade finance facilitation programme. Under these programmes, either the TMB would co-lend with multilaterals, or the multilaterals would guarantee the local bank risk with confirmed letters of credit. In so-doing, TMB's capacity to lend or guarantee to these banks or sectors had dramatically increased. Also to be taken into consideration was the co-relation with export credit agencies. In this respect, as a Japanese bank the TMB worked closely with the JBIC (Japan Bank for International Cooperation) and NEXI (Nippon Export and Investment Insurance). After the 2008 TICAD IV meeting, the Japanese Government announced a set of measures to support African development by utilizing JBIC to double investment from Japan to Africa. The Tokyo Mitsubishi Bank also had two previous transactions, both in South Africa. One was to strengthen the network of transmission lines in South Africa and the other was to expand port capacity in South Africa; both were to improve South Africa's business environment. Finally, he said that the previous month, TMB – together with IFC – had announced support for the Indian Exim Bank to support exports of Indian SMEs. The Tokyo Mitsubishi Bank would like to gradually build up these types of transactions to contribute to Aid for Trade.

13. The Moderator addressed her next question to Timothy Turner of the African Development Bank. She asked what the African Development Bank expected the recently-launched Global Trade Liquidity Program to accomplish and, in the context of what had been said by the previous two speakers, what AfDB's expectations were over the next couple of years?

14. Mr.   Timothy Turner, Director, Private Sector Operations Department, African Development Bank, said that the GTLP was a response of international financial institutions to the global trade crisis that had spun out of the global financial crisis. The GTLP intended to be a pool of resources of about US$5 billion provided by between 10 and 15 multilateral and bilateral participating institutions. An amount of US$2.5 billion had already been committed of which US$1 billion had been signed by

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the World Bank Group, led by the IFC. The Board of Directors at the African Development Bank, whose contribution would be used exclusively to finance trade in Africa, had approved a US$500 million contribution to the programme. In addition, there were a number of other bilateral agencies and multilateral agencies, and regional development banks that would be part of the GTLP. The JBIC was also part of the programme, in a parallel way, for an amount of US$1.5 billion. The aim was to raise a total of US$5 billion which would be channeled through a group referred to as "utilization banks", i.e. those that were large international commercial banks, as well as regional commercial banks that were very active in trade finance.

15. As mentioned by a previous speaker, the global financial crisis had not only led to constraints on the credit side but also to an even stronger constraint on the liquidity side. In other words, the banks that were financing trade finance did not have sufficient liquidity in US dollars to be able to provide financing for trade. The GTLP was launched as a response to this situation, channeling liquidity through the large utilization banks to a network of issuing banks and local banks. The GTLP was a global response to the global financial crisis, but since Africa had been the hardest hit, at least one-third of GTLP resources were expected to go to Africa. The GTLP's principal mechanism was a risk participation structure whereby the utilization banks, with their local correspondent or issuing banks, would generate trade receivables and then request from GTLP refinancing of 40 per cent. The risk sharing arrangement meant that GTLP would take 40 per cent of the risk and that the commercial market would take 60 per cent. In other words, with US$5 billion of funding, which was then leveraged up by 60 per cent from the commercial institutions, this would typically be an average of about 270 days' financing over a three-year period and would lead to around US$50 billion in additional liquidity for the marketplace – of which it was hoped that approximately US$15 billion would be for Africa. Now that the GTLP had been launched, it was hoped that in the course of the next few weeks it would move into execution and implementation mode with the objective of moving the resources as quickly as possible.

16. In response to the Moderator 's comment that, in looking at the African Development Bank, this would provide a cushion for insurance agencies and their clients to be able to actually begin to move things forward over the next three years, he said that the GTLP was a temporary, transitional arrangement with a two-year termination date – albeit with a possibility of extension. The idea was that liquidity would be provided to address the current constraints and that, thereafter, the GTLP would slowly move out of the market as commercial financing came back to its normal levels.

17. The Moderator then asked Arin Jira, as head of the ASEAN Business Advisory Council, to give an idea of where he expected new demand to come from within the current crisis, and how the Business Advisory Council was facing the situation? She mentioned the fact that, in recent years, ASEAN had pushed to expand access for its products within Asia by signing free trade agreements with Japan, China and the Republic of Korea which had expanded ASEAN's home market to cover about two billion people.

18. Mr. Arin Jira, Chairman, ASEAN Business Advisory Council , said that the Asian economies were in a good position to cushion what was happening in the current financial crisis. This was because lessons had been learnt from the 1997-1998 Asian financial crisis. Many companies had also developed corporate strategies to avoid the crisis and to undertake trade investment and business activities regionally. Pained at seeing lost investment, the companies had been trying to secure the half-a-billion-people market of ASEAN and also to further move into the two billion consumers involving Japan, China and the Republic of Korea. As a result, governments of ASEAN countries, in partnership with the private sector, were riding out of the crisis quite satisfactorily. The common aspiration for countries in the region was to be more self-sustaining and not to rely too heavily on Western market-style influence and financial institutions. Malaysia was a good example of this trend. During the Asian financial crisis it had not followed IMF prescriptions and had managed to work outside the conventional wisdom to succeed. That was something from which others could learn. He

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was of the view that consumerism in ASEAN countries remained strong and that those countries still had purchasing power; demand for goods and services would remain and be sustained locally and regionally. As far as the ASEAN Business Advisory Council was concerned, it had noted that investment risks in China, quotas and safeguards, intellectual property protection, and environmental risks were driving global firms to diversify and shift production out of China. That situation could provide opportunities for the ASEAN's private sector. A further example was the fact that Japan imported about 60 per cent of its food. Even though demand and exports were down, demand would always be there, but just in a smaller quantity, and that the opportunity was there for many countries to replace China as a supplier due to concerns over quality and standards generally. But to do this, trade financing was needed, especially for SMEs – to whom the banks were not lending at all.

19. Turning to the issue of market access, he said that the international global market offered more opportunities for companies in the region. In collaboration with governments, efforts had been made to ensure that Western countries did not apply protectionist measures. During the Asian financial crisis, for example, international institutions in Western countries were suggesting liberalization as a salvation measure to enable investment and take-over of some ailing Asian companies. The only question that arose was how open would the Western market be to welcome the penetration of the Asian products and services. Asian countries also had a lot of natural resources which were in goods required worldwide, both for food and for energy security, and also alternative sources derived from agricultural products which were more affordable.

20. He concluded by saying that the question of using China, ASEAN and other Asian economies to lead the world out of the current crisis was a rhetorical one since this was not in the minds of the private sector or relevant stakeholders. The global financial crisis was bad for everyone and ASEAN, for its part, was closely following the statements of economic and financial experts.

21. In response to the comment by the Moderator that the Asian economies did not expect the West to behave differently to what they had prescribed during the Asian financial crisis, he said that as the East had done, the West was looking at recapitalization of government banks, and at saving some of the big companies. A lot could be learnt from what the West was doing on trying to be more stringent with these institutions which, in turn, would have an impact on the global financial institutions. This was something that would help in overcoming the financial crisis.

22. Turning to infrastructure investment, the Moderator then asked how Mr. Jira saw that type of investment and whether he thought it would offer a stimulus to the economy?

23. Mr. Jira said that he fully supported the idea of infrastructure investment and had recommended to the ASEAN leaders that there was no better time to build infrastructure than the present. The time to build infrastructure was when everything slowed down so that when the economy picked up you would be able to go faster than the others. Of course, money was needed to do this and he said he was sure that AsDB could provide resources. The geography of ASEAN countries prevented movements of goods and services, and people, and caused divergence in levels of development. Indonesia and the Philippines were a case in point. These countries were made up of thousands of islands and many analysts were quick to assume that their respective governments did not take care of the people. If one looked at the primary cost, this could be seen as a result of a lack of infrastructure. Lao PDR, for example, was landlocked with no sea ports to facilitate the movement of goods. It relied on roads that remained insignificant and poor. What was needed was to ensure that the proper measures were taken so that goods destined to go through Lao PDR did not end up going through other countries. Direct flights to secondary or tertiary cities in ASEAN were also difficult. And some flights from ASEAN to Europe were shorter and cheaper than the secondary and tertiary cities. What was interesting – and in a sense good news – was that one could argue that the reason this region was not significantly effected by the current global crisis was because it was cut off from the world market and therefore not too much infected by the global market trading system. He

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therefore fully supported infrastructure building and said it was something that governments, not only in ASEAN but everywhere, should also support.

24. Continuing on the issue of infrastructure, the Moderator then asked Mr. Vinod Kala, whose company, Emergent Venture India was heavily involved in providing services to mitigate climate change through consulting on carbon value lifecycles, how the carbon value lifecycle could generate investment resources for infrastructure development?

25. Mr. Vinod Kala, Managing Director, Emergent Ventures India Pvt. Ltd. , explained that carbon credits came from a structure and procedure designed to invest in projects that reduced carbon dioxide emissions or greenhouse gases. Reduced carbon emissions resulted in carbon credits which had value in monetary terms and could generate investment surplus. The reduced carbon credit could therefore generate value in the international market. Carbon credits could, for example, generate value for investment in important and fundamental infrastructure in developing countries.

26. Such a project could be, for example, a wind energy plant built to reduce carbon dioxide emissions by a factor of about two thousand tons per mega watt of the capacity that was created in a year which, on a ten-year timeframe, could generate approximately 30-40 per cent of investment that had gone in to creating that particular plant. All that credit could actually be sold. By designing the project according to universally defined methodologies and actually selling the credit well, over approximately 10 years almost 30-40 per cent of the value invested could be generated just by carbon trades. Sometimes the projects qualified for 21 years so that percentage would be higher. It was interesting to note that developing countries had very high levels of renewable energy resources which so far had not had any value at all. These included, for example, agricultural waste, and forest waste where forests became carbon sinks due to absorbed carbon dioxide. There were also other infrastructure areas where a lot of investment surpluses or carbon credits could be generated by a developing country without resorting to aid or loans. These included plantations (both bio fuel and commercial), and waste treatment (for example, methane gas from cattle waste). In India, for example, the gas generated from cattle waste could provide electricity to villages – both as a source of light and for a cooking medium. In this way, an entire investment of roughly US$35-40 million would more or less be covered, over a timeframe of about 10 years, through carbon credits.

27. The issue of climate change was an urgent one and required cooperation at international level. A single country could not solve the problem on its own. Developing countries were responsible only for 20 per cent of the problem in climate change, yet 80 per cent of the solution could be found in the developing world by investing in renewable energy resources that had not been valued so far (e.g., solar power, agricultural waste, and forest resources) and thereby reducing carbon emissions. Investments could also involve local communities which could have a huge impact on poor people. The prediction was that approximately US$150-300 billion every year would need to be invested across the world to effectively combat climate change issues. If climate change issues were tackled well, and if the world came up with the right kind of structure for post-2012, this would have a huge impact not only on development and poverty reduction, but also on the ability to live.

28. The Moderator then opened the floor for comments.

29. Addressing the issue of renewable energy in developing countries, the representative of Zimbabwe said that there was the problematic issue of coal deposits. Most energy in developing countries was generated from coal and while it was true that there was a lot of interest to invest in coal, there was very little interest regarding issues of renewable hydro or solar energy because the capital injection needed for those issues was higher than that needed for coal. He asked Vinod Kala how this issue could be dealt with so that there was less coal-energy generation and more renewable energy projects?

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30. In reply, Mr. Kala said that this was a classic problem. Renewable energy was still new and there were few players that could develop renewable energy projects. There was little clarity as to what policies should be used to promote renewable energy. In India, for example, the problem was that, although a coal waste power plant could easily generate electricity at something like six cents a kilowatt hour, how could an investment be justified in a solar power plant which would cost something like 25 cents a kilowatt hour? However, if one was to disaggregate the problem and look at the economic system, most renewable energy sources started to become justified. This was the way that policy-makers needed to look at it. A lot of policy work needed to be done to see what kind of renewable energy could be promoted. It was not a question of just creating a system of subsidies to support renewable energy; renewable energy was very comparative in itself. The other factor that was not accounted for, especially in Africa, was the cost of carbon which in itself could actually justify investments in renewable energy. A lot of thought was therefore needed about how and where to justify renewable energy. Another interesting factor was that it was just like any other new industry. The cost of renewable energy generation was falling very significantly and a policy needed to be created to keep the future in mind; renewable energy would then definitely start to flow.

31. Addressing his question to Timothy Turner, the representative of Zambia asked, when talking about collaborative funding, in particular trade receivables, what guarantees there were that the partnership and benefits would be passed on to the private sector and how would that be done? What should not happen was that this became a means of bailing the banks out as opposed to bailing out the trade receivables.

32. In reply, Mr. Turner stated that the GTLP would only be refinancing new trade receivables. The utilization banks that qualified to participate in the GTLP had a network of correspondent issuing banks – i.e. the local banks – that were performing the trade finance transactions. As they generated new receivables, these would go into "pools" for risk sharing to get the GTLP to purchase 40 per cent of those trade receivables. So the GTLP, whose administering agent was the IFC, would be looking at the receivables presented to determine whether or not they were valid, i.e. whether they were kinds of sectors that GTLP wanted to support, were they the right institutions that GTLP had agreed to support, the right maturities, or the right instruments, etc. There was a good control mechanism in place to ensure that the resources went towards stimulating new trade as opposed to bailing out ailing banks. It was also interesting that, through this mechanism, the utilization banks – i.e. the international banks – would always keep 60 per cent of the risk and were therefore not looking to subsidize any of the local banks. They just wanted to be able to turn over that business faster. The GTLP was, in effect, a substitute; it was helping to recreate the secondary market for trade receivables which had all but dried up as a result of the financial crisis.

33. The representative of Djibouti addressed his question to all the panellists. He said that in the 1990s, when the IMF was promoting structural adjustments, there had been limited government interventions, particularly in industrial type projects. Now, as a result of the current economic crisis, governments were increasingly nationalizing banks and were intervening as regulators. This had been done on a massive scale within public companies in the framework of automobile companies, or other companies that had found themselves in a complex situation. Given this situation, he asked whether the principle of liberalization itself could be called into question? The private sector in developing countries was not performing very well because of a lack of funding and technology, and the government's role was becoming increasingly significant. As the principle of liberalization had now been discussed for some time, he asked whether that principle was still being used.

34. The Moderator said that she would ask the panellists to address this question during the summing-up of the Session by looking at how they saw the industry that they represented from the current perspective vis-à-vis perhaps what they might have looked like in the 1970s, 1980s and 1990s when those kinds of decisions were made.

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35. She then invited Mr. Mehta of Power Technics, Kenya to provide an insight as to what sort of challenges his company faced in respect to its operations in Kenya, Tanzania and Uganda and whether the various financial institutions were in fact providing the support they had spoken about?

36. Mr. Naresh Mehta, Chief Executive Officer, Power Technics, Kenya , said that the Kenyan vision of achieving industrialization by 2030 could only be ensured if there was sufficient industrial capacity. Aid for Trade could help companies such as Power Technics and other SMEs in East Africa to build that capacity. Industrial capacity would lead to trade but trade would only flourish with a sustained industrialization process focusing on three key areas: trade finance, building industrial capacity, and intellectual capacity. Power Technics, for example, had used intellectual capacity in industry property rights to protect some of the equipment that it had designed and developed locally. If all the parameters worked in conjunction, there would be success. Turning to trade finance, he said there was a lack of long-term credit to source capital goods. Most of the banks were giving credit for five or six years, or five plus one, or six plus one, normally with a one-year moratorium (or four if it was for capital equipment) and if this long-term credit was available the working capital could be used for growth, building capacity and mobilizing technology for high-productivity. Energy was also fundamental to this industrialization process and investment should be encouraged in this sector. From the perspective of East Africa, for example, only 15 per cent of the people had power in their homes. The energy sector offered opportunities for growth. Business collaborations should be encouraged and sub-contracts created with SMEs and multinational companies which in turn could lead to sustained local supply chains. Barriers should be eliminated and special treatment accorded to developing country SMEs.

37. Turning to industry capacity, he said there were three key areas for growth: energy infrastructure, information and communication technologies, and roads. Aid for Trade could help in these areas by facilitating and supporting what companies such as Power Technics and other SMEs in the energy sector had embarked on. Laying a foundation for cottage industries or grass roots industries was fundamental for the industrialization process; over time and with the right support, those cottage industries could become small-scale industries. One of the challenges in this respect was to bring new entrepreneurs and innovations into the system, e.g., building local capacities and manufacturing electrical engineering products. An example of this concerned the mobile telephone. Ten years ago there were less than 100,000 mobile phones, today there were over 17 million. A lot of infrastructure was therefore needed in terms of energy, towers, and servicing the equipment which was being installed in the country. Unless a capacity and process to use the technology were built, servicing of this high-tech equipment again became a problem. Focus therefore needed to be put on training so that any possibility of failure was reduced. He referred to the fibre optic link that was soon to be installed in Mombassa which would open new avenues for business processes and call centres and hence new avenues for growth in trade and industry.

38. Whilst governments, donor agencies and institutions were looking at projects that would take years to complete and implement, renewable energy such as in the area of minor hydro, solar, or wind, were a good place to start to already get projects up and running. An example of this was the experience he had had with the African Growth Opportunity Act (AGOA) that had assisted in creating capacity in the garment industry. Power Technics had been involved with regard to developing power needs for several garment industries when AGOA had been announced. AGOA would help Africa even more if it was expanded to include other non-traditional manufactured items which would enhance local industrial capacity.

39. With regard to intellectual capacity, he said that unless an industrialization process was created to absorb people of the region into the system and intellect within the countries, there was always going to be a shortage of knowledge workers. Power Technics and other SMEs were in the forefront of the industrialization process and some of the high-level officials who had visited the company, including the President of the European Investment Bank, had considered it to be an

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incubator of knowledge, because of its focus on training. Aid for Trade could be the catalyst in the process and could help companies such as Power Technics to become centres of excellence. The industrialization process would create capacity to address the country's and region's needs and good progress could be made in this regard. To do this, governments and regulatory authorities needed to play their part as well. Tax incentives could be provided for trade. Barriers such as verification of quality and standards by third parties could be reduced. Aid for Trade could help here by providing investment in quality assurance and training and enforcement of compliance with international standards. Once the standards were implemented, it would create an avenue for growth, employment and the establishment of regional standards offices.

40. In the area of education, aid should be focused on teaching equipment which was desperately lacking in universities, for example, that offered education in technical fields. Power Technics had been providing donations and bringing in professors and lecturers to do the training. However, if Aid for Trade could assist in areas such as teaching equipment, this would fast-track the training of graduates. Training was a costly area for industries; it took at least three years for a graduate to receive knowledge after training to attain the level of output expected of an engineer. As a result, industries were looking for trained staff which meant that an avenue was being closed for new graduates coming into the system. Collaboration was needed with higher education institutes with a view to developing skills and appropriate industrial needs. Aid for Trade could assist in setting up mechanisms with the authorities to facilitate graduate training needs. As an incentive, a direct government subsidy or tax rebate could be offered to offset the cost of training. In the long run, new trained manpower – and hence income – would be created for the countries involved.

41. In conclusion, he said that the target of achieving industrialization by 2030 could only be achieved if the fundamentals of basic industrialization processes were well-planned without further degradation of the environment. Developing countries such as Kenya could learn from the past experience of developed countries and ensure that the burden of cleaning the environment was not passed on to future generations. Aid for Trade could help in this important area.

42. The Moderator said that there was huge opportunity for the private sector to get involved in supporting this new kind of infrastructure and technology but not enough companies taking advantage to actually fuel entrepreneurship. She turned to Rosa Whitaker and asked her to provide additional information on what AGOA had been doing.

43. Ms. Rosa Whitaker, President and Chief Executive Officer, The Whitaker Group , said that one thing that AGOA had demonstrated was that market access could definitely work. AGOA had promoted a 300 per cent increase in African exports to the US markets to reach approximately US$66 billion in value. Non-oil exports from Africa to the US market had increased by about 200 per cent. Through AGOA, Africa had access to the US market for a wide range of products. The most successful example was in Lesotho where AGOA had created 40,000 jobs in the textile and apparel industry. For the first time in Lesotho's history, there were more people working in the private sector than in the public sector.

44. The differing results experienced under AGOA and other market access initiatives had come about because a comprehensive approach was needed. It was almost disingenuous to talk about providing market access to countries with dysfunctional systems, or dysfunctional states. Without the capacity to trade, trade finance, technical assistance, or technology transfer, market access meant very little. There had been enough studies to confirm that 80 per cent of the business constraints in Africa had to do with infrastructure, power and transport and the Aid-for-Trade initiative really needed to focus on these areas. Focusing on infrastructure, power and transport would significantly reduce the cost of doing business in Africa and spur regional trade. Africa's level of regional trade was only about 10 per cent - the lowest in the world. An approach with results-oriented interventions was needed and she recommended that the Aid-for-Trade initiative should support an expanded facility

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within the African Development Bank that would establish an infrastructure fund at the Bank to provide loans and grants to support infrastructure in African countries.

45. While AGOA had created jobs and had certainly made a considerable change regarding exports to the US, it had not prompted the desired investment response. A new AGOA was being drafted for the current US Administration that focused on tax incentives. Tax incentives were very important because they worked. US companies that invested in labour intensive sectors, particularly those that had multiplying effects and value addition in Africa, would be able to repatriate profits back to the US without taxes. They would also get tax credits for wage and fringe benefits for African workers and a tax credit for sourcing products that were made with significant African content. The next level that the new AGOA was aiming for was to have a trade capacity building fund to provide the kind of technical assistance to which Power Technics had referred. As a result, it was hoped to globalize market access. She concluded by saying that the EU and the US should provide similar market access and that she would like to see a global AGOA.

46. The Moderator commented to Rosa Whitaker that the same result would not be seen in hard infrastructure unless there were harmonized customs verification or quality assurance systems. Investment was dependent on the business environment.

47. Ms. Whitaker agreed and noted that there were a lot of donors that were willing to invest to make the business environment work. She cited a proverb "money is coward, it does not go where it fears". It was important for the Aid-for-Trade initiative to invest in those areas where notable results were being achieved and where other donors were reluctant to provide support. That was why she had suggested that Aid for Trade should have a specific focus on infrastructure, power and transport while at the same time coordinating other donor assistance around the business environment. It was equally important for the systems to be harmonized as could be seen from the models for those countries that had been successful in development and tracking investment. Those countries had infrastructure, a good business environment, relatively strong institutions, and they focussed on education. In sum, the donor response with the private sector should be a coordinated one.

48. Turning to the issue of good policy development, the Moderator then asked Ms. Whitaker whether she thought that SMEs had the conduits to have their voice heard by the business community and by governments?

49. In reply, Ms. Whitaker said the Whitaker Group was an SME and that SMEs in Africa would have a greater voice if they were in the game. For this to happen, in addition to increasing the voice of SMEs, a mechanism should be found that could strengthen the SME network throughout Africa. In this respect, she referred to the success of Coca Cola's distribution centre which had enabled SMEs to get into the supply chain and which had created not only an additional 12,000 jobs but also US$500,000 in income. Another example was the brewers SABMiller who had just announced an investment initiative in Angola which would create 66,000 jobs. Global companies should be encouraged to bring SMEs into their supply chain and more technology transfers should be made to SMEs. SMEs needed a greater voice and needed to get more into the game of global trade.

50. The Moderator addressed a further question to Mr. Mehta regarding SMEs having their voice heard or getting into the game and contrasted what might have happened if they had been in ASEAN. She recalled a visit she had made to Malaysia where she had seen many training institutions that were all private-sector led and which were there to complement the growth that was taking place. The question of franchise could also be one of the solutions to providing some of these entrepreneurial mechanisms to take care of opportunities. She asked whether there really was a vibrant SME community that had its voice heard?

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51. Mr. Mehta referred to Kenyan Industrial Estates and noted that in every town there were industrial estates that were developed to create small-scale industries which would coordinate activities and become part of the supply chain. Taking the example of Korea, India and China with regard to vehicle plants, the idea was that ancillary industries that were surrounding a vehicle assembly plant would be working in tandem with it. That had created a growth avenue for newly industrialized countries, including, for example, Indonesia, Malaysia, and others. If the same focus was applied in Africa it would provide an opportunity for small-scale industries to thrive. Some companies had progressed rapidly, especially where information technology centres were concerned.

52. The Moderator asked Mr. Jira if, from the ASEAN Business Advisory Council perspective, SMEs were getting their voices heard?

53. Mr. Jira said that the situation in ASEAN countries was no different from elsewhere. SMEs everywhere in the world were complaining about how difficult it was to get financing and this was something that governments around the world should be helping with. He argued that donors should look into the situation because many SMEs were capable of doing so much but were unable to do so because they could not find the credit. This was the case not only in Asia but in Africa as well. The problem was turning talk into action.

54. The Moderator addressed her final question to the Geneva representative of the International Chamber of Commerce (ICC), noting that the ICC represented not only SMEs but a broad base of the private sector right across the globe. She asked what ICC's perspective was on what was taking place, where solutions existed, and what the private sector perspective was on the topic of Aid for Trade?

55. Ms. Jacqueline Cote, Permanent Representative in Geneva, International Chamber of Commerce, stated that ICC had broad representation from both small and large companies and laid particular emphasis on bringing SMEs into its policy dialogue. For the private sector to fulfill its role as an engine for growth, ODA spending had to be devoted to (i) infrastructure (e.g., roads, telecommunications, energy, and rail road imports); (ii) regulatory frameworks (i.e. business environment); (iii) knowledge (e.g., education and allowing SMEs to have access to financial services); and (iv) fair and competitive global markets. There was no one-size-fits-all solution. In this respect, it was good to be able to see specific examples in certain countries of what had worked. Solutions would vary by continent and by country. Only so much could be done at the global level. Promoting the discussion at national and regional level was essential. This was the view that the Aid-for-Trade initiative had also taken.

56. For the private sector to make investments, access to finance was essential. ICC had carried out a global survey in Spring 2009 of the 122 banks which participated in the ICC banking commission. The survey had come up with some of the same conclusions that had already been mentioned during the course of the discussions. For example, priority areas were trade facilitation, trade guarantee facilities, increasing financial liquidity pools, and improvement of export insurance processes. Referring to trade facilitation – which included customs modernization, capacity building, and building up the competence of governments – Ms. Cote said that for the last ten years the ICC had been strongly advocating a WTO agreement on trade facilitation. ICC hoped that an agreement on trade facilitation would be one of the outcomes of the Doha Round.

57. The Moderator noted that ITC saw the private sector playing three important roles: (i) a beneficiary role; (ii) as a provider of Aid for Trade, particularly in the area of infrastructure, where the private sector could provide financing; and (iii) as a route to market. In ITC's view, it was critical to match real needs with where the resources went. She then opened the floor for further comments.

58. The representative of Nepal stressed the need to focus on infrastructure development, particularly physical infrastructure such as power, transportation, and information and communication

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technologies, which were important in order to build up the productive capacity of LDCs. Aid for Trade should be able to intervene in this area and the multilateral funding agencies and bilateral donors should focus on providing this kind of infrastructure so that LDCs could build up their productive capacity.

59. The representative of Barbados noted that the notion of public-private partnership was extremely important because it helped to determine buy-in. It also helped to determine the sustainability of aid projects and to ensure that the private sector was involved in the medium- and long-term monitoring of those projects. Referring to the discussion on the regional dimension of Aid for Trade and the need to accelerate interaction on regional processes, he asked whether there was any existing interface between SMEs and regional organizations? If so, what was the level of interaction between SMEs and these regional organizations in terms of public-private partnership? Barbados had taken note of the idea of a possible SME network to ensure that there was some role and interaction for SMEs in the decision-making process, but would be interested to learn of best practices with regard to enhancing the relationship between the private sector and government agencies.

60. In relation to infrastructure projects, he asked what was considered to be the role of the private sector in developing and supporting infrastructure projects? He said there was a role for the private sector to take ownership of certain infrastructure projects which would have direct short- and medium-term benefits. As far as basic infrastructure, such as roads, was concerned, Barbados could understand the suggestion that even in the current time of financial crisis one should continue to enhance, build and maintain infrastructure. For the Caribbean, where secondary infrastructure such as tourism was needed, he asked whether it was responsible, from a fiscal point of view, to continue to implement infrastructure projects given the current financial climate?

61. The representative of Ecuador said that Ecuador paid particular attention to the statements relating to the importance of SMEs in developing Aid-for-Trade development programmes and it was taking the development of SMEs into account in its national development plan. Ecuador believed that this was essential in order to achieve economic development and to be able to integrate into trade strategies and other instruments. Obviously a developing-country SME was very different in size to a developed-country SME and it was very important to bear this mind. One problem in Ecuador, for example, was the lack of liquidity and financial capital to be able to export and import. There was also the problem of international standards, some of which had been set up by multilateral mechanisms and others by private institutions. This was a serious problem and was something to be borne in mind in the context of the development of Aid-for-Trade programmes. With respect to competition, Ecuador believed that it was essential that the importance of private sector participation was incorporated into Aid for Trade. This stemmed from the fact that Aid-for-Trade programmes could help with technology transfer. Another important area was the facilitation of access to markets, including on the supply side. That was where all these factors came into play. He asked the panellists how, in their experience, did they believe Aid for Trade could be strengthened, particularly in developing-country SMEs? In conclusion, he said that Ecuador shared the comment expressed by Barbados with regard to the development of an SME network.

62. The representative of Malawi recommended the establishment of regional bureaux for standards. With regard to investment and addressing supply-side constraints, one should not lose sight of the issue of promotional investment. This was something that could be taken up, for example, by the international chambers of commerce because they needed to be encouraged to modernize and to share experiences. Malawi had recently been classed as one of the most peaceful countries in Africa and he invited the international chambers of commerce to assist Malawi in promoting investment in some of its crucial sectors.

63. The representative of Sudan said that the issue of restructuring services had been discussed but not private-sector involvement in agricultural investment. He asked how the right model for this

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could be found so that private-sector partnership in agriculture investment could benefit both the people in Africa as well as the investors, and how SMEs could be a partner with a foreign investor in agriculture? Sudan hoped that the recently-launched GTLP would specifically consider agriculture.

64. The Moderator noted that the point about the challenges and opportunities with regard to private-sector investment in agriculture was an important one. She said that there were probably some best practices and models of what had been done and what had worked so that SMEs could benefit from public-private partnerships. Some specific questions had been targeted at the ICC, including with respect to SME development and technology transfer, and she asked Jacqueline Cote what some of the benchmarks were in terms of public-private partnerships and asked her to provide examples of the regional dimension to this issue.

65. In response, Ms. Cote said that one of the roles of the private sector that had not been mentioned thus far was its role as an advisor to governments in how they should apply their Aid-for- Trade funds. The private sector – including large companies and even some of the smaller global companies – had an enormous amount of knowledge that could be beneficial on the supply chain and on how projects were managed and funded, and on how performance could be improved. If ICC's view was sought on these very fundamental management points, programmes could go a lot further. The private sector had a lot to gain from Aid for Trade and, equally, had a lot to contribute. There was a need for strengthened dialogue at the local level and global organizations such as ICC could facilitate in this regard and be the agent for the dialogue to take place. She agreed that the private sector had a lot of untapped potential and said she had seen good presidential, ministerial or government private-sector advisory committee models that worked best when they were broken down by sector.

66. Another way to engage the private sector was through joint ventures but the problem there was that companies in the developing world were mostly too small to have an effective partnership with the larger companies. However, there were models where the government and donors would help to organize cooperatives and structure them into arrangements where smaller companies could work with larger companies. Finally, she said that there were a lot of untapped resources going to the developing world through foundations. Corporate social responsibility was more "philanthropic capital" and this capital was not being mobilized or tracked. This was another approach whereby countries could raise capital and also have strategies that dealt directly with the consumers. There were now more socially conscious consumers – American teenagers, for example, spent about US$1 billion dollars on clothing and an initiative, Purchase for Africa, had just been launched to get them to purchase those clothes from African factories. There were a lot of innovative approaches for African countries to engage the private sector and also global consumers.

67. Ms. Whitaker said much could still be done. Private companies tended to retain staff even in times of crises so that when things picked up they could be the first in the system to take off. There therefore had to be some mechanism to understand the role of the private sector and how it could help countries in terms of sustaining social responsibilities. The experience that the Whitaker Group had had in technology transfer had, for example, helped it create an export market out of Kenya to the neighbouring countries and beyond. So technology transfer partnerships had also assisted during difficult times as well. It was interesting to hear public-private sector partnerships being cited as an important way of building infrastructure, especially with regard to climate change. In this respect, Asia and Africa had examples of where the government, private sector and local community had all worked successfully together.

68. Mr. Jira said that Aid for Trade was a very good initiative. It was important to involve the private sector in the initiative because trade was carried out primarily by that sector. It was also important for the private sector to understand government initiatives so those initiatives could be followed and appropriate advice given. What needed to be stressed was that financial schemes should

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be created for SMEs. Although the importance of building infrastructure had been referred to, equally important was human resource development in which governments should play a big part.

69. Mr. Turner said that the African Development Bank was an example of an institutional public-private partnership and work on infrastructure was a priority both on the public and private side. The issue of regulatory frameworks was also a high priority and the Bank worked with the government through its public sector windows on this question. Access to finance was also a priority for the Bank because of the current situation in the international markets.

70. Mr. Masutani said that in the implementation stage the role of the commercial bank was very important and the Tokyo Mitsubishi Bank had a lot of expertise which it could share with the other players involved in trade finance issues.

71. Mr. Jones said that two points had come out of the discussion. The first was that regional integration was not only particularly relevant to Africa, but also to any grouping of small developing countries. Countries needed to integrate their markets to create a domestic market large enough to compete in the global marketplace. The second was that one had to make sure that liquidity guarantees, structures, and programmes were made available to developing-country SMEs to support their business growth.

72. In summing-up the Session, the Moderator said that it was clear that the private sector had a critical role to play – be it with respect to access to finance, access to human resources, or access to knowledge – when countries set their priorities and determined where resources went. The right kind of mechanism had to be found so that a public-private dialogue could take place, whether it was on policy formation and how the private sector accessed finance, particularly for SMEs. Another important issue that had come up in the discussion was the question of regional standards bodies. For cross-border trade to expand and move forward, regional standards also had to be accepted otherwise the existing third country trade would continue. On the issue of human resource development, the question was how that was going to be done. Here there was a potential role for regional centres of excellence to ensure that resources matched current needs. The role of investment also played an important part in moving forward and expanding trade and all countries were interested in finding the right mix of policies to attract the right kind of investment. The regulatory environment was critical for infrastructure to work properly, for business to work properly, and for attracting the right kind of investment. It had also been made clear that financial institutions needed to operate within a framework which built trust and confidence. On public-private partnerships, a number of questions had been raised, including: what were the right kinds of public-private partnerships; what were the best kind of benchmarks to look at; and what was the role of public-private partnerships in the area of agriculture. There were best practices of public-private partnerships and the dissemination of information about where these partnerships were working was something to be considered.

VI. SESSION 5: AID FOR TRADE – MAINSTREAMING TRADE IN NATIONAL AND REGIONAL DEVELOPMENT COMPETITIVENESS STRATEGIES

1. Addressing his first question to Minister Udenwa, Nigeria, the Moderator, Mr. Ricardo Meléndez-Ortiz, Chief Executive, International Centre for Trade and Sustainable Development (ICTSD), said that although Nigeria's economic growth was expected to continue its positive trend in 2009, staying at just over two per cent, the economy was nevertheless dependent on one commodity. He asked what Nigeria's dependence on petroleum products meant for its economy and for its foreign trade?

2. Minister Achike Udenwa, Minister of Commerce and Industry, Nigeria , said that up to now Nigeria's economy had depended on oil which contributed to over 80 per cent of its revenue. Changes in the global economy and world politics had caused problems with regard to oil prices and Nigeria's

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oil income had fluctuated. Nigeria had neglected many of its other main sectors such as agriculture, manufacturing, and minerals with the result that, until recently, little or no income had been coming from these sectors. Nigeria's oil income had been used to invest in manufacturing, especially in basic industries such as iron and steel, petro-chemicals, and fertilizers. Unfortunately, most of these basic industries had collapsed because they had not been properly managed by the Government. On a positive note, Nigeria had been able to reduce its foreign debt from about 36 per cent in 2004 to four per cent in 2007.

3. The Moderator said that he understood that the Nigerian Government was trying to push for market reforms necessary to diversify its export base and generate long-term growth. These reforms were no doubt challenging and he asked whether the realities of politics in such a diverse and young nation would mean that progress would be slow?

4. Minister Udenwa said that Nigeria had made quite a lot of progress over recent years. Nigeria had celebrated 10 years of continuous democracy and, in October 2010, would celebrate 50 years of independence. A lot had happened in the past, but over the last ten years – and especially during the current President's regime – many reforms had been implemented such as in the areas of tax, trade, banking, and legislation. There were currently many reforms that tried to remove public sector monopolies and to diversify the economy by bringing in the private sector. These included, for example, in the areas of ports, the power and energy sector, and railways. The private sector was playing a more important role in Nigeria's economy. Trade was also now part and parcel of Nigeria's national planning. All of this, together with political stability, meant that Nigeria had become a very important and viable market for future investments.

5. The Moderator agreed that in terms of long-term growth this sounded very positive and, as a final question to Minister Udenwa, he asked what role Aid for Trade could play in Nigeria's continued economic growth?

6. Minister Udenwa referred to the fact that Nigeria was a developing country and many of its neighbours were LDCs. The role of Aid for Trade was crucial in carrying out the reform process which was needed to build capacity, to stabilize and to increase confidence in Nigeria's economy, and to build supply-side capabilities. Aid for Trade could help maintain consistency and economic policies which, in turn, would lead to growth in industry, for example in SMEs, by standardizing programmes and producing exports at more competitive prices.

7. Turning to Minister Prasidh, Cambodia, the Moderator asked how, given his many years of accumulated experience as Trade Minister, he saw the current crisis and whether it made him question Cambodia's faith in the export-led model of growth?

8. Senior Minister and Minister of Commerce, Cham Prasidh, Kingdom of Cambodia , noted that at the time of the 1997 Asian financial crisis when many South East Asian countries were badly hit, Cambodia, had been able to make a speedy recovery due to its open trade policy. In the present economic crisis, however, countries were trying to cope with an even worse situation which affected food, fuel, flu and finance. Cambodia was now starting to see the impact: factory closures had laid off some 63,000 workers; there had been a 20 per cent drop in tourist arrivals; and the construction sector was at a standstill. Cambodia had doubled its GDP growth in the past five years, but this year, the IMF had forecast Cambodia's 2009 GDP growth at minus 0.5 per cent. This forecast had since been revised to 2.5 per cent, but it was still lower than the double-digit figures to which Cambodia had been accustomed. All this inevitably had financial repercussions and support was needed to ensure that Cambodia remained afloat.

9. Export-led growth needed to continue, and more market access was needed. This led Minister Prasidh to express concerns about back-door protectionism. He argued that LDCs in Asia

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should enjoy the same trade preferences as other LDCs. Aid for Trade was important as a stimulus package for LDCs. There was also a need for increased trade finance; goods were there to export but traders did not have the money to buy them. Cambodia intended to pursue export-led growth, whilst at the same time pushing for greater duty-free and quota-free market access arrangements.

10. The Moderator asked Minister Prasidh to expand on his experience of aligning donor resources to promoting economic diversification and growth and how Cambodia's Trade SWAP programme – which was an interesting model in this regard – had been set up.

11. Minister Prasid h said that the objective of the Trade SWAP programme was to initiate dialogue among all relevant stakeholders – including government, private sector, development partners, financial institutions, academia, and civil society – to forge a national consensus on a common economic policy for Cambodia's needs and requirements. It was important to receive coordinated and well-channeled assistance, which was geared to the needs expressed by beneficiary countries. In Cambodia's Trade SWAP programme, trade groups – or trade pillars – which consisted of government officials, experts and consultants were used as a mechanism to design and prepare projects in core areas such as reform, product development, services for export development and capacity for trade development. He envisaged now adding trade finance to the list of trade groups. It was important that these mechanisms conformed with the Paris Principles on alignment, harmonization, transparency, and accountability.5

12. The Moderator noted that Zambia was also dependent on one commodity, i.e. copper. Referring to the fact that the price of copper in international markets had dropped from US$3.15 per pound in 2008 to roughly US$1.90 per pound in 2009, he asked what this price decline had done to the Zambian economy?

13. Ambassador Mwape, Permanent Representative to the WTO, Permanent Mission of Zambia, Geneva, said that not only was Zambia dependent on one commodity, copper, but it was dependent on the mining sector more generally. There had been a slight improvement in the price of copper, which was now just over US$2.25 per pound, and the outlook was more optimistic, but he said that the financial crisis had lowered demand for commodities which had provided only minimal foreign influence in Zambia. This had had consequences on Zambia's inflation rate which had risen to 16.6 per cent – almost double what it had been before the crisis – and Zambia's local currency had been devalued by over 27 per cent. Another negative impact was on the mining houses which were cutting costs by reducing their labour force. Some 10,000 coal-mining jobs had been lost as a result. Government revenue – particularly during the second quarter of 2009 – had also suffered drastic reductions to approximately US$60 million dollars. This was particularly significant for a small economy such as Zambia. The solution to these negative impacts was to reduce the cost of doing business, including in the transport and energy sectors. For example, how could the costs of moving goods to markets be reduced and how could more power be generated in order to reduce customer tariffs. Zambia was therefore looking at measures to mitigate the negative situation and to diversify its economy away from copper.

14. The Moderator noted that falling copper earnings had also translated into decreased domestic demand in other sectors. He asked what that decline had meant for Zambia with regard to its efforts to diversify its economy, particularly in the agriculture and services sector? He wondered if regional markets offered a way out of the situation?

15. Ambassador Mwape said that Zambia considered that diversification was key to overcoming the current situation. The economic crisis had led the government to refocus its economic priorities. Zambia had started promoting diversification within the mining sector, looking at other metals such as

5 Paris Declaration on Aid Effectiveness, 2 March 2005.

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gold and nickel. It was also looking at resetting priorities in the agriculture and tourism sectors and creating policies that would attract investment. The North-South Corridor project showed that regional markets were important and that being landlocked was no longer a disadvantage. Countries could take advantage of being "landlinked" by using the available markets around them. With this in mind, Zambia wanted to go beyond the regional market aspect and benefit from the global multilateral trading system. The Doha negotiations, in which Zambia had been actively involved, was therefore an important remedy to its situation as a small economy.

16. Commenting on the fact that Zambia, as an LDC, was eligible to benefit from the Integrated Framework, the Moderator asked Ambassador Mwape what that initiative had achieved in Zambia?

17. Ambassador Mwape said that the EIF was an important tool and had assisted Zambia in mainstreaming trade into its fifth National Development Plan for 2006-2010, as well as in setting the right priorities. This, in turn, had assisted donors in their decisions on where to make specific interventions. The EIF also ensured country ownership by facilitating private sector involvement and coordination with the government and by being instrumental in leveraging additional Aid-for-Trade funds over and above those available in the EIF Trust Fund.

18. Turning to the Latin American region, the Moderator recalled that inflation in Peru in the 1990s had been close to 7,000 per cent and income per capita had been falling sharply. Poverty had increased by 10 per cent and was affecting almost half of the population. Over the last 20 years, however, Peru had been able to turn this situation around. Since 2005, its GDP had been increasing at a rate of between approximately five and 10 per cent per annum and the prospects for growth in 2009 were roughly 3 per cent. Peru's economic performance was a lot better than many OECD countries. He asked Ms. Liliana Honorio, Peru, what role trade and trade policy had played in enabling the Peruvian authorities to turn this situation around?

19. Ms. Liliana Honorio, Coordinator for Cooperation, Ministry of Foreign Trade and Tourism, Peru, said that trade had played a fundamental role in turning around Peru's fortunes and was a key catalyst for its economic growth. Peru aimed at exporting a diverse range of high quality goods and services products. Peru was of the view that any process of integration had to be based on improving quality of life and reducing poverty. This was achieved by improving access to export markets through facilitating exports, providing more positive investment conditions, and making good on its commitments. This process of turning trade into a key component of its development agenda had entailed three major stages for Peru: the opening up of its trade regime; the inclusion of the private sector in negotiations on the Free Trade Area for the Americas (FTAA); and the development of a trade for development agenda.

20. The Moderator then asked how Peru had managed to secure private sector involvement in trade negotiations and also what role had been played by other groups?

21. Ms. Honorio said that by involving all stakeholders in the process, including various social partners, employers, trade unions, academia and other civil society groups, it had been possible to keep the private sector interested. There had been total support from the public sector.

22. The Moderator noted that Peru was a middle income-country and it had limited access to grant funding. He asked what role Aid for Trade could play for Peru and what trade-related direction Peru would be taking in the future.

23. In reply, Ms. Honorio explained that at the time of the FTAA negotiations there was a hemispheric cooperation programme that had built trade negotiation capacity. This had provided incentives for the further strengthening of what was Peru's current Ministry of Foreign Trade and Tourism. Regional trade arrangements were playing an important role in economic growth in the

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Latin American region. In each agreement, there was a chapter on trade capacity building. The role of Aid for Trade was therefore fundamental to Peru not only to ensure that it could implement its various trade-related obligations, but also so that it could take advantage of and benefit from the opportunities that trade opening offered.

24. The Moderator turned to the Integrated Framework (IF) and its role in getting LDCs to mainstream trade in national development plans and into PRSPs (Poverty Reduction Strategy Papers). He said that given the fact that the IF Secretariat's focus was on working with national authorities to identify their trade constraints and getting the domestic policy-environment right it could be difficult to show tangible outcomes. In this respect, he asked Ms. Dorothy Tembo what the IF had achieved with mainstreaming and how its impact could become more tangible in the future.

25. Ms. Dorothy Tembo, Executive Director, Enhanced Integrated Framework Executive Secretariat6, emphasized that the ultimate goal was to integrate LDCs into the global economy so they were able to trade and reap tangible benefits. Mainstreaming was a means of reaching that goal but this also had to be accompanied by specific interventions that addressed the constraints identified as part of the DTIS (Diagnostic Trade Integration Studies) process. In other words, mainstreaming trade policies and international development strategies required the systematic promotion of mutually reinforcing policy action across government departments and agencies creating synergies in support of agreed development goals. In practical terms, this required a lot of work on the part of countries that had already indicated their capacity constraints not only in relation to ensuring that effective institutional structures were put in place, but also in relation to being able to undertake the necessary needs assessment and pinpoint what priority areas needed to be addressed. The pace at which this process moved forward depended on the respective countries' different situations. She said that over time it had become clear to countries that the PRSPs and DTIS taken together could ensure that relevant trade issues were taken on-board and included in national development strategies. This reflected an increased recognition that trade could play an important role in development objectives. This had been demonstrated by the fact that out of the 31 LDCs who had responded to the Aid-for-Trade partner-country questionnaire, 17 had acknowledged that trade was a priority and had been included in their national development plans, and others had stated that trade had been mainstreamed into other policy tools such as sector policy and budget.

26. One of the current challenges was accompanying mainstreaming with the necessary human and financial resources. The role of the EIF was important in this respect because it could assist countries in the coordination of institutional dialogues and resource mobilization from either the national budget or from the donor side. Countries clearly recognized the need for a concrete foundation as far as institutional set-up was concerned, without which it would not be possible for them to move forward in a coordinated way and achieve tangible results. It was therefore important to work with countries to ensure that the appropriate institutional structures were put in place, that there was effective dialogue and, finally, implementation of the programme. Another key element in the process was enhanced country ownership; countries had to take a lead in identifying their needs and how help should be provided. Countries had also recognized the importance of the role of the donor facilitator to collaborate with the EIF Focal Point and to assist in committing the necessary financial support. In conclusion, she said that the EIF was an important tool that LDCs could use to tap into the broader Aid-for-Trade resources that were available.

27. The Moderator then opened the floor for comments.

28. The representative of Sri Lanka said that Sri Lanka was not categorized as an LDC but, as a net food importing and net energy importing country, it was classed as a low- to middle-income country. As an import-export economy, Sri Lanka relied on two commodities (apparel and tea) and

6 The Enhanced Integrated Framework Executive Secretariat was established on 13 October 2008.

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two export markets (EU and US) both of which had been affected by the current economic downturn and financial crisis. Commodity prices had gone down due to a decline in demand and exports had seen a 7.2 per cent decline over the first quarter of 2009. There had also been a large decline in imports and in tourism – which was Sri Lanka's major income sector. The external shocks and impact in these four areas had been very severe. He stressed the importance of Aid for Trade for Sri Lanka but noted that, according to the figures quoted in the OECD-WTO Aid for Trade at a Glance 2009 report, in 2007 the total amount of Aid for Trade given to Sri Lanka had declined by 50  per cent compared to 2002 and 2005. To overcome the negative impact of the economic downturn, Sri Lanka could now look forward to developing its tourism industry which had for some time also been thwarted by internal terrorism. However, to achieve this Sri Lanka needed an objective, transparent, and proper analysis of the security situation and to have the adverse travel advisories immediately removed. Sri Lanka was now beginning a new chapter in its history and needed short -term standby arrangements. In this regard, technical details and discussions had been completed but there had still not been a satisfactory conclusion.

29. The representative of Burundi said his comments concerned the coordination of aid and the identification of needs in respect of Aid for Trade. On the issue of aid coordination, in some countries Aid for Trade was considerable but sometimes the needs were not properly identified. Burundi, itself, had faced that problem in that there were many parties and organizations involved in a specific sector but often that had not been clearly identified. Difficulties had arisen, for example, where non-governmental organizations (NGOs) that were accredited to work in a clearly identified specific sector had expanded and widened their activities with the result that the Government did not always know exactly what the NGO was doing and where it was working which, in turn, resulted in ineffective aid. If aid was to have a positive effect it needed to be properly managed and properly channeled.

30. Regarding the identification of needs, he said that although most international bodies or organizations worked in their own specific and clearly defined area – e.g., capacity building or infrastructure financing – they might not necessarily be able to identify all the problems. Burundi, for example, was now trying to improve the situation that had arisen with the private sector – one of the driving forces behind economic development. USAID was helping by providing assistance to Burundi's private sector to enable it to become more competitive. This was important in Burundi because, due to savings levels being very low, its financial and banking sectors were not very efficient and could not provide the necessary medium- or long-term financing required to set up and run projects. Up until recently this problem had not been properly identified but now some of Burundi's partners were getting involved to help these particular sectors become more efficient both nationally, regionally, and internationally. The targeting and management of aid were therefore equally important so that the aid went to the right place and had the right effect.

31. The representative of Pakistan said that local ownership of programmes was crucial for their success and that they needed to respond to local needs and aspirations. Pakistan's trade policy was well integrated into its economic growth policy but without capital inflows integration could be very difficult. The need for Aid for Trade was felt very acutely in South Asia. Pakistan was of the view that the 900 million poor people of Asia would be pushed further into hunger and poverty if Aid for Trade was not given the support it required from donors. Although perhaps not a correct assessment, he noted that the figures regarding Aid-for-Trade flows to Asia over the last three years had been static. Enhanced Aid for Trade was needed to overcome the major challenges faced in Asia which included high emerging costs, infrastructure development, trade financing, diversification and competitiveness and, in the case of Pakistan, the additional burden of the fight against terrorism. Pakistan hoped that the Second Global Review would look at these issues so that Aid for Trade could be streamlined and better channeled to further augment development in the Asian region.

32. Turning to mainstreaming by donors, the Moderator asked Ambassador Horn af Rantzien whether, from the perspective of the Swedish International Development Cooperation Agency

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(SIDA), the increase in Aid-for-Trade resources from donors suggested that donors were responding to the call for Aid for Trade. He noted that, taking the EU alone, 22 of its 27 member States had Aid-for-Trade operations. He asked if the challenge was now one of coordination, rather than resource mobilization?

33. Ambassador Mia Horn af Rantzien, Deputy Director - General, SIDA , referred to the joint Aid-for-Trade strategy adopted by the EU in 2007 which embraced the full Aid-for-Trade agenda as set out in the Aid-for-Trade Task Force recommendations.7 Looking at the figures, the trend was one of increasing mainstreaming of Aid for Trade into EU development operations. She said that in fact 23 out of the 27 member States had activities in the field of Aid for Trade and that 11 member States, including Sweden, had an operational strategy for Aid for Trade. There was also a lot of work being done in other countries. There was therefore an upward trend in terms of mainstreaming but she stressed that much work remained to be done. One of the important challenges that remained, which was also the case with regard to SIDA, was that Aid for Trade was still not sufficiently mainstreamed into the policy dialogue that EU member States had with partner countries. Collaboration between donors, which had been underlined in the Aid-for-Trade Task Force Recommendations, the Paris Principles, and also the EU Code of Conduct, had to be improved in order to make the aid that was delivered efficient. An important aspect of this was to increase the joint work relating to needs assessments and to improve the strategy formulation with regard to division of work in terms of delivery and evaluations.

34. Turning to the regional level, she said that it was clear that this was an important area and, looking at EU figures, support for regional integration appeared to be capturing an increasingly prominent share of the EU Aid-for-Trade agenda. Some member States, for example, had taken specific measures to address the regional level, such as creating specific teams focusing on regional problems. Challenges also remained at the regional level relating to regional needs. Here, mechanisms needed to be improved that translated those needs into effective and articulate demands for regional and sub-regional Aid for Trade to which donors could respond. There was also an obvious need to improve coherence between national and regional priorities and to improve coordination at the regional level, both between donors and between partner countries. Sweden gave high priority to results- and poverty-based Aid for Trade which was also the base line for the EU Aid-for-Trade strategy. Sweden and the United Kingdom had volunteered to lead work within the EU on strengthening the core focus and quality of Aid for Trade and she said mainstreaming of trade into national development plans could be better achieved by enhancing the understanding and implementation of Aid for Trade and developing methods and toolkits to improve the efficiency of donors.

35. With regard to the global level, she said that a number of gaps in this area had been identified and listed in the Aid-for-Trade Task Force recommendations and that is was important to continue to refer to this list to ensure that all the gaps were being addressed. Important gaps that had been identified, for example, were the "lack of data on and analysis of trade policies and their impact on development" and "better data and statistics are a precondition for better understanding the process of globalization and its impact and for determining priorities for development cooperation". The current global economic crisis and the recent efforts with regard to monitoring had revealed the importance of dealing with data gaps such as on subsidies, procurement policies, and non-tariff measures more generally, and their impact on exporters and developing countries, in order to know whether the right measures were being taken in terms of development cooperation. Aid for Trade was very important to fill these data gaps.

36. In conclusion, she said that the strongest incentive for mainstreaming trade was to show results on the ground and there had been many examples of how Aid for Trade could contribute to

7 WT/AFT/1, 27 July 2006.

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growth, employment, and poverty reduction - and how a results-based approach in delivery would promote mainstreaming to a higher level. As the Aid-for-Trade Task Force had recommended, it was important to emphasize the need for concrete and visible results on the ground. The Second Global Review and the importance of monitoring and evaluation had also provided strong incentives for both donor and partner countries to mainstream trade and to see it as a tool for development. It also provided an incentive to advance the Aid-for-Trade agenda in their respective countries. The Global Reviews could be used as a regular forum through which all concerned could continue to learn from each others' experiences by showcasing what trade could do to reduce poverty

37. Referring next to the Netherland's reply to the OECD-WTO Aid-for-Trade donor questionnaire, the Moderator asked Mr. Johannes Smeets what the Netherlands needed by way of engagement from developing countries to make good on its commitment to spend at least €550 million per year on all categories of Aid for Trade?

38. Mr.   Johannes Smeets, Deputy Head, International Markets Division, Sustainable Economic Development Department, Ministry of Foreign Affairs, Netherlands, said that the reason behind the Netherlands' pledge was the need for Aid for Trade to make a contribution to delivering the Millennium Development Goals, not only by encouraging sustainable economic growth, but also by improving the position of the poor. He said that engagement by developing countries was crucial to achieving these goals and that growth and trade – as well as social sector polices – should be incorporated into developing countries' national poverty reduction strategies. This would ensure that Aid for Trade remained demand-driven and involved civil society and the private sector. The Netherlands fully supported the Enhanced Integrated Framework and believed that the EIF could be used to provide support to LDCs so they could mainstream trade in national development plans and into PRSPs.

39. Engagement with developing country governments on Aid for Trade should also be expanded to include the private sector, foreign investors and local entrepreneurs, who also had important roles to play. In the Netherlands' Aid-for-Trade programmes, public-private partnerships were becoming increasingly important. Corporate social responsibility was essential for both the workforce and the environment in developing countries as well as for maintaining support for the globalization process. Aid-for-Trade activities which included corporate social responsibility should help combat protectionism by promoting positive incentives for developing countries in their efforts to perform better in such areas as labour standards, climate and environment protection, and human rights. Success also depended on the engagement in developing countries being reflected in targeted efforts by donor countries. Good coordination at recipient country level as well as at donor headquarters level was essential for better harmonization and alignment of donor activities.

40. The Netherlands attached great importance to its cooperation with other EU member States and other donors. In this regard, the joint EU Aid-for-Trade strategy should help to ensure that the broad Aid-for-Trade agenda would be implemented more effectively in EU partner countries through a results-based approach that harmonized and coordinated donors' efforts in accordance with the Paris Declaration on Aid Effectiveness. The Netherlands wanted to achieve concrete results through the EU Aid-for-Trade strategy but striving to be effective was not sufficient. The demand-driven proposals that were expected from beneficiary countries and regions needed to be properly supported by harmonization and coordination of procedures and efforts at donor headquarters level. The Netherlands had therefore informed the EU Commission that it was prepared to be involved in thematic working parties – that operated within sectors such as trade policy and regulations, business and other services, agriculture, transport and storage, energy generation, etc. – so that the EU Aid-for-Trade strategy could contribute to more effective and coordinated implementation of both new and existing EU programmes. One such example of this was the EU-Africa partnership on infrastructure. Although many EU programmes were by nature part of the EU Aid-for-Trade strategy implementation, an Aid-for-Trade coordination mechanism at headquarter level was still needed.

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Better coordination of donor programmes would also stimulate engagement by developing countries and lead to a national consensus.

41. The Moderator then referred to the Aid-for-Trade event held in Montego Bay8 and asked Ambassador Tucker, what had been done in Belize since this event to leverage trade further into its national development strategy?

42. Ambassador Adalbert Tucker, Ambassador for Foreign Trade, Ministry of Foreign Affairs and Foreign Trade, Belize, said that Belize was a small country that operated within the CARICOM region. The technical expertise and other tools demonstrated at the Montego Bay meeting had been an important stimulus for Belize's national dialogue and vision on Aid for Trade and the role trade should play in national development. Belize was now better able to appreciate what could be offered through regional cooperation. Mainstreaming trade was crucial for Belize and it had been made clear at the Montego Bay meeting that issues such as productivity, interactions between human beings – within a country, within a region, and in a broader, global sense – also had to be taken into account. Belize therefore needed to look at several areas, at the same time ensuring that it operated within the commitments of its regional relationships within both the CARICOM and the Central American regions. Taking all these factors into consideration and bearing in mind the specific requirements of Belize, a three-year Action Plan 2009-2012 had been set out to provide a systematic approach to achieve mainstreaming. The Action Plan included an institutional aspect, the private sector, the regional partners and capacity building of human resources.

43. Belize was also looking at how to target bilateral programmes to build particular capacities which might not be directly trade-related but which provided the underpinning for a society that was intent on becoming more productive. For Belize, a national public awareness campaign – led by the Minister of Foreign Affairs – had also played a crucial role in demonstrating the importance of mainstreaming trade into Belize's national strategies. The issue of national public awareness had been written into a public project and the OECS (Organization for Eastern Caribbean States) had recently confirmed that it would be preparing a project document leading to a possible full scale project that could be replicated in other countries of how one geared up a country that had not previously had trade as its core element. Working groups composed of representatives of ministries, the private sector and a consultant had also been used as mechanisms through which the specific elements of Belize's national development strategy had been outlined.

44. Addressing a final question to Mr. Paulo Kautoke of the Pacific Islands Forum Secretariat, the Moderator asked what plans the Forum Secretariat had to take the Aid-for-Trade work forward at a regional level with its member countries that faced particular constraints and challenges due to their geography and location.

45. Mr. Paulo Kautoke, Representative to the WTO, Pacific Islands Forum Secretariat, Deputy Permanent Representative of the Kingdom of Tonga to the WTO, said that the Pacific was the smallest of the regional groupings and faced a number of challenges in taking advantage of the potential opportunities that trade liberalization might bring. The Pacific Island countries (PICs) needed assistance to build their supply-side capacities in order to engage meaningfully in international trade and, to this end, over the past few years had undertaken a number of initiatives to address their trade-related needs. The Pacific Aid-for-Trade strategy, endorsed by Pacific ACP9 Trade Ministers at their meeting in Samoa on 15 and 16 June 2009, was driven by the Pacific Plan for Strengthening Regional Cooperation and Integration for which there was now broad alignment with the regional plans of the Pacific's major development partners. Its vision was "to create conditions necessary for achieving dynamic trade-related growth, promotion of cultures and traditions, sustainable

8 Latin America and Caribbean Regional Review held in Montego Bay, Jamaica on 7 and 8 May 2009.9 The African, Caribbean and Pacific Group of States.

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management of resources, and partnership with neighbouring and worldwide economies". An integral part of the strategy, which aimed to provide a cost effective and efficient way of delivering Aid for Trade in a timely and effective manner, were the principles of ownership, alignment, harmonization, management for results and mutual accountability as set out in the Paris Declaration on Aid Effectiveness. The vision would be achieved through four strategic goals which had been aligned to the categories outlined in the Aid-for-Trade Task Force Recommendations, namely (i) to create a trade policy and regulatory environment that was conducive to achieving sustainable economic growth in PICs; (ii) to overcome supply constraints in a manner that increased the private sector's contribution to development; (iii) to upgrade infrastructure in a way that stimulated trade integration and development; and (iv) to integrate into regional and global markets through appropriate macroeconomic adjustment measures.

46. In order to achieve these goals, the PICs, with the assistance of the Pacific Islands Forum Secretariat, were in the process of defining in greater detail four focal programmes aimed at improving their institutional capacity for trade policy and regulations, developing the productive capacity for trade, enhancing trade-related infrastructure, and at promoting trade-related adjustments and other trade-related measures. So far, eight regional project interventions had been identified with a total budget of approximately US$68 million. This figure was expected to be higher if large infrastructure projects were also included. In addition, there were currently 74 national project proposals with a combined funding of nearly US$110 million. The list of national projects would be updated on a regular basis to reflect the evolving process regarding the identification and prioritization of a country's trade-related needs. Project profiles for both regional and national projects had been prepared and were now being discussed with specific development partners with a view to mobilizing Aid-for-Trade funds. The PICs would continue to work on outlining in greater detail the expected outcomes of the projects in order to clarify the links between each individual project intervention and the achievement of higher regional objectives.

47. While significant progress had been made, the implementation of Aid for Trade in the Pacific had been challenging and there was still much work to be done to ensure that the PICs did not become Aid-for-Trade orphans. In this regard, the PICs urged the international community to support the Pacific Aid-for-Trade strategy and to provide assistance for its implementation which would occur at both national and regional levels. While pilot programmes were probably the most appropriate way to finance most of the national interventions, the PICs were also considering establishing a Pacific Trade and Development Facility (PTDF), the aim of which was to channel Aid-for-Trade assistance to the Pacific Island countries efficiently and effectively in support of the Pacific Aid-for-Trade strategy. The PTDF would also enhance donor coordination in mobilizing Aid-for-Trade resources for strengthening supply capacities to the PICs.

48. With respect to the sequencing of implementation of the Pacific Aid-for-Trade strategy, the PICs would first need to ensure that the appropriate institutional mechanisms were in place in order to absorb Aid for Trade and a system of national Aid-for-Trade focal points – with a mandate similar to those already up and running under the Enhanced Integrated Framework – would be set up in this regard. These focal points would liaise with the Pacific Islands Forum Secretariat which had been mandated to manage regional Aid for Trade. The capacity of the national focal points needed to be strengthened if they were to assess their country's trade-related needs and prepare project proposals that effectively addressed constraints. Strong emphasis would be placed on developing the capacity to manage and monitor project implementation. The PICs should make significant advances in respect to its Aid-for-Trade strategy but there was still much work to be done. The elaboration of the Aid-for-Trade strategy and the proposal to establish a trade development facility was a significant attempt not only to help the beneficiaries but also to bridge the gap with development partners.

49. The Moderator then opened the floor for comments.

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50. The representative of Mali said he wished to highlight some technical aspects concerning the issue of obstacles to the strengthening of trade in a country's national development strategy. Mali had been able to develop its trade development policy in coordination and with the cooperation of UNCTAD. For effective planning, LDCs needed a medium-term financial framework. Another point related to the principles of the Paris Declaration which provided the basis for Aid for Trade, including the Integrated Framework, and he asked what place did those countries which had not signed or acceded to the Paris Declaration have in the implementation of the Integrated Framework?

51. The Moderator asked each of the panellists for a final word on how the mainstreaming agenda should be pursued in the future.

52. Minister Udenwa said that Nigeria had tried to improve its non-oil exports over the years and, although it was now at an advanced stage in carrying out reforms so that non-oil exports would overtake oil exports, it nevertheless needed support. He stressed that Aid for Trade was not just important to developing countries and LDCs. Industrialized nations should ensure that the Aid for Trade made available was to their own interest because LDCs or developing countries were a source of raw materials and a final destination of manufactured goods. For world economic stability it was important to ensure that aid was directed at improving the national policies of developing countries and LDCs.

53. Minister Prasidh said that Aid for Trade and the Doha Development Agenda were like Siamese twins; they shared one single heart and neither of them could exist alone. For that reason, pressure should be exerted on both; on the Aid-for-Trade side, to see how Aid for Trade could be developed using the EIF and other facilities such as the STDF or multi-donor trust funds, and, on the Doha Development Agenda (DDA) side, with regard to duty-free and quota-free market access for LDCs. In respect to the latter, he referred to the recent decision by the Council for Trade in Goods to waive for another ten years the requirement that some developing countries could extend preferential treatment to LDCs without having to give also the same treatment to other WTO Members. His other message was that there needed to be a strong political will for change. Aid for Trade had to be the tool through which further reforms could be made to advance the trade agenda and to reduce poverty.

54. Ms. Horn af Rantzien said that, in her view, the Aid-for-Trade Task Force recommendations were the Paris Principles in practice and that adhering to those recommendations would be a way of working along the lines of the basic ideas behind the Paris Principles. Spotlighting Aid for Trade as a tool for development was working and should continue. But in order to continue support for the initiative, focus also needed to be developed on what worked, both in terms of process and in terms of actual implementation of projects and programmes, to show results and that Aid for Trade was an effective means for poverty reduction. She said coherence between different policy areas was important, especially in a time of crisis, as was the need to fill the data gap. Sweden attached great importance to strengthening and continuing the pro-poor Aid-for-Trade approach. The EIF and other instruments that had been mentioned during the discussion were also important to ensure that Aid for Trade worked at a country level.

55. Ms. Honorio stated that more detailed information regarding Peru's situation and the recent Aid-for-Trade event that had taken place in Lima10 was contained in the documents that Peru had distributed to participants. An important additional tool that Peru used to map out and clearly identify its needs was its national strategy for building trade capacity which channeled the requirements of various sectors and set them in order of priority. This had taken into account all thematic areas which had been deemed to be important and had been accomplished with the assistance of multilateral agencies and organizations. Aid for Trade was one of Peru's priority areas and Peru was taking full advantage of what it offered. Improvements needed to be made, however, because there were reforms

10 National Dialogue on Aid for Trade held in Lima, Peru on 3 March 2009.

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underway that needed to be concluded. One such example was the need to better distribute the benefits accruing from trade; Peru had achieved economic reforms which now had to be turned into social benefits and development, including poverty reduction.

56. Ambassador Mwape emphasized that although the EIF was limited in terms of the resource capacity that it could provide to LDCs, it was instrumental in leveraging additional Aid-for-Trade finances from bilateral cooperating partners over and above those available in the EIF Trust Fund. The EIF also assisted in ensuring country-ownership of projects and programmes by helping to set country's institutional frameworks in place and assess needs and priorities so that bilateral donors could direct their interventions accordingly.

57. Briefly summing up the discussion, the Moderator said that the impressive display of knowledge and experiences on Aid for Trade made it clear that Aid for Trade did work but that more resources and more work was needed. It was also clear that discussion of the financing and other needs of developing countries for integration into global markets was something that belonged at the WTO. Three key outcomes of the session were that: (i) Aid for Trade could respond to a country's vision with respect to its national growth strategy; (ii) that ownership went beyond national governments and that strategies needed to be built with the participation of all stakeholders; and (iii) that export-led growth could only be achieved through access to markets.

VII. SESSION 6: AID FOR TRADE – REGIONAL IMPLEMENTATION EXPERIENCES

A. COMESA-EAC-SADC NORTH-SOUTH CORRIDOR

1. The session began with the presentation of a short film on the North-South Corridor. 11 The Moderator, Mr.   Jon Snow, Channel Four News , described the Corridor as one of the most tangible and exciting projects associated with Aid for Trade and a testament of extraordinary cooperation both across and between continents. He set out a number of issues for discussion including what the Tripartite Common Market for Eastern and Southern Africa (COMESA), Southern African Development Community (SADC) and East African Community (EAC) Arrangement was trying to achieve with respect to the project; how important the project was for prospective beneficiaries such as Zambia; how important it would be in reducing the transport costs of commodities in the mining industry and exports of metals and concentrates; the challenges faced by road transporters and improvements expected as a result of a successful conclusion of the project; and the support being provided by the African Development Bank to Aid for Trade in general and the North-South Corridor Pilot programme in particular.

2. Mr. Juma Volter Mwapachu, Secretary General, East African Community , stated that since 2005, leaders of COMESA, SADC and EAC had met twice a year to see how best to coordinate their policies in making their economic spaces robust through trade facilitation, harmonization of regulatory systems, and unlocking their bureaucratic systems which sometimes contributed to the high costs of doing business. In early 2008, the Tripartite heads had agreed to bring these ideas to the political level in order to get commitment from their leaders. This had led to the Tripartite Summit held in October 2008 in Kampala, Uganda where a number of Presidents from the region had agreed to fast-track their regional integration by moving from an informal relationship to a formal legally-binding relationship which would come about through the creation of a free trade agreement (FTA) and then later a customs union. He hoped that a meeting of Trade and Infrastructure Ministers, scheduled to be held in October 2009, would lead to an agreement to create the FTA. The idea was to unlock the great economic potential in the region of which the North-South Corridor was a critical underpinning. That was why the High Level Conference had been held in Lusaka, Zambia in April 2009. At the Conference, pledges of US$1.2 billion by developed partners and US$1.5 billion by the

11 The film can be viewed at http://www.northsouthcorridor.org/mediastuff.php

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Development Bank of South Africa for projects and programmes directly related to the North-South Corridor had been made.

3. Mr. Darlington Mwape, Ambassador, Permanent Representative to the WTO, Permanent Mission of Zambia, said that as a landlocked country the issue of transport was highly important to Zambia. The costs of moving goods from producers to the markets were high and to ensure competitiveness these costs needed to be reduced. Since these costs could not be reduced independently by governments due to goods having to cross borders, countries in the region needed to work together to harmonize procedures to reduce costs. In a broader context, if the supply-side constraints of least-development countries were not addressed, these countries would not be able to reap the benefits of a successful conclusion to the DDA negotiations. For Zambia, there were few options for moving goods other than through the North-South Corridor. With respect to in-country coordination, Zambia had had to begin coordinating more efficiently within the public sector. There were currently 12 agencies working at the border; coordination, therefore, was important in order to achieve the successful implementation of the North-South Corridor.

4. Mr. Nathan Chisimba, President, Chamber of Mines of Zambia , said that the African copper belt had potential to produce large quantities of minerals and as a result the African Copper Belt generated much interest in the mining industry. However, one key challenge was moving the raw materials into the mining locations and, in turn, moving the produce out of it. The cost of transportation was very high. Roads, railways and energy were major challenges. Even during a boom in mineral prices, mining companies had realized that the existing infrastructure was 'bursting at the seams' as a result of the investment coming into the region. Infrastructure was a challenge even in good times. What was convincing about the North-South Corridor project was that, for the first time, those in the region were working together. In the past, each country had acted alone which was not how business worked in the modern world and how the global economy was moving. A programme that addressed policy reform at the same time as infrastructure rehabilitation and upgrade was attractive. In the past, there had been statements of intent but no demonstrable movement on the ground. The kind of commitment that was being shown, and the hope that the projects would be successfully completed, had encouraged the Zambian private sector to give its full support.

5. Mr. Barney Curtis, Executive Director, The Federation of East and Southern Africa Road Transport Association, indicated that over 80 per cent of mined goods were moved in and out of Zambia by road. The trucking industry was also fairly deregulated and provided that you were registered in your country, you were free to operate where you liked. If the railway was unable to provide the service required by the market, then moving mining goods would remain primarily on the roads. Some of the challenges included border delays; the number and excessive charges levied at road blocks; infrastructure deficiencies; road safety; and the problem of the HIV pandemic. He hoped that the North-South Corridor would address these long outstanding issues and make a difference.

6. Mr. Alex Rugamba, Coordinator, Infrastructure Consortium for Africa (ICA), African Development Bank, said that the high level commitment that had been demonstrated by Heads of State with respect to the North-South Corridor had made it easier for partners to come on board. Priorities were locally defined and owned, and the partners' role was merely to accompany the process. The majority of investments required addressing policy and regulatory issues which was best done through ownership and high level commitment. The African Development Bank was responding in a number of ways. First, through capacity building, private sector development, trade finance and addressing the supply-side constraints of energy, transport, and information and communication technology (ICT). Another was through project preparation, for example the NEPAD Infrastructure Project Preparation Facility which was enabling projects to be prepared to a bankable stage. As coordinator of the ICA, he said that one way partners were responding to the North-South Corridor and other similar initiatives was by working together. While there was good coordination on

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the side of RECs, this had to be mirrored by partners. One vehicle through which this could be done was the ICA which was a platform through which the donors worked. There were three main areas being addressed including the joint financing of projects, removal of policy and technical barriers and promoting private sector participation in infrastructure projects. The ICA would also consider risk mitigation.

7. Mr. Rick Scobey, Acting Director for Regional Integration, Africa Region, World Bank , said that the potential of the North-South Corridor was unlimited. It represented a transformative investment which highlighted not only a new approach to partnership with RECs but also a partnership with development organizations that the World Bank wanted to support. There were four unique features: (i) it was African-led, not only by national governments but also by the RECs throughout East and Southern African; (ii) it presented a regional solution to a critical set of national problems which, at a time of a global financial crisis, was the way forward; (iii) there was an upfront recognition of the importance of balancing the hardware investments in roads, ports and railways, as well as soft investments in policy and administrative reforms; and (iv) the programme represented a new model for working with development partners in the private sector. With the North-South Corridor, the UK Department for International Development (DFID) had taken the leadership role on the donor side and had worked behind the scenes to build a collaborative harmonized framework which followed the Accra Agenda for Action, i.e. that donors stop undertaking individual projects but come together in a more harmonized investment framework. That was made possible by the fact that the RECs had put in place a strong Secretariat which carried out a lot of analytical and investment ground work which enabled donors to come on-board. The World Bank considered the North-South Corridor as a transformative investment that would reshape the dynamics of growth in Southern Africa.

8. The Minister for Regional Integration and International Cooperation of Zimbabwe, Pricilla Mushonga, gave some insight on the first shared customs post between Zimbabwe and Zambia which was expected to open in September 2009 and which formed part of the North-South Corridor project. She highlighted the fact that the project provided a new model and the ability to address poverty. One of the major challenges that was being faced in the region was informal trade, which largely involved women. The one-stop border post 'Chirundu Model' had been used to integrate the aspect of informal traders by building, together with DFID, a centre where informal traders would be assisted. The 'Chirundu Model' would also be replicated to develop the Beitbridge crossing. The first step was to address the 'soft issues'. The North-South Corridor provided an opportunity for public and private partnerships to move beyond the trade facilitation issues and address the broader issues related to development by mainstreaming trade into development issues.

9. A lively discussion ensued with significant participation from the floor. One point made was the assertion that some 60 per cent of the additional cost of doing business arose out of the deficiencies on the soft-side of infrastructure, with only 40 per cent arising from the hard infrastructure. Addressing the problems associated with soft infrastructure was therefore important. One way was through the one-stop border post through the Aid-for-Trade initiative. Another participant noted the need to ensure inclusiveness in terms of guaranteeing that all countries in the specific region benefited. In this context, it was mentioned that the North-South Corridor was a pilot which would be extended to other countries in the region. The North-South Corridor was a first step in a long path on trade facilitation. In a second phase, there would be a focus on developing a further trade corridor, the 'Nakhala Corridor' which would link Malawi and Mozambique. Various interventions also stressed the importance of ensuring comprehensive coverage in projects, i.e. to not just concentrate on the improvement of roads and rail but also to include air transport where costs were high. In this regard, the Tripartite task force was also looking at air transport within the region in order to liberalize airspace and reduce the cost of freight and passengers.

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10. To ensure sustainability, additional funds would need to be raised from beyond what was being provided by conventional Aid for Trade. Greater political commitment was needed from Governments to set funds aside which could provide additionality in funding various trade facilitation projects. A challenge in this regard was bringing together financial institutions and other lenders who were accustomed to short-term lending and not project funding. Providing guarantees to these private players to fund such projects was also a challenge. Sovereign bonds were now becoming key drivers in funding projects of the kind under the North-South Corridor. Ensuring the involvement of the private sector, including SMEs, was also important in order to ensure buy-in in the various projects. In this context, the importance of public-private partnership was highlighted. In the case of Zambia, the Sub-Committee of the Chamber of Commerce specifically looked at infrastructure and the Sub-Committee's President regularly interacted with Government and other players to ensure that the Chamber's agenda was factored into any initiatives such as the North-South Corridor. The Zambian Business Forum also provided a platform for the private sector to fully integrate in such processes.

11. The need to ensure buy-in from the population was felt to be critical to ensure a successful outcome by some speakers. In this context, it was important to mobilize the population around the areas of improved infrastructure. There was also a need for accountability, to provide transparency and to offer assurances. This was something that COMESA-EAC-SADC had already put in place. A Tripartite Trust Fund managed by the Development Bank of South Africa had been set up through which all pledges and commitments could be channeled. A Steering Body comprising the Chief Executive Officers of COMESA, EAC, and SADC had been established and would be the main driver of the North-South Corridor projects. In addition, there was also a Task Force at the functional level comprising the Infrastructure/Trade Directors of the Tripartite.

12. In the view of some speakers, to ensure that the new infrastructure would be able to support the consequential traffic and not end up being dilapidated after a short period of time, it was important to move cargo from the roads to the railways. In Zambia, for example, there were no rail networks near the mines and the Government was calling upon developers to lay railways. Rail transportation was predominantly a "volumes game" and Zambia had taken the decision to become landlinked instead of landlocked. As a result, the idea of regional trading blocks had been endorsed and had increased the volume of trade with neighbouring countries. The government had also invited the private sector to get involved in the railway links to facilitate the increase in volume. The investment currently required had been programmed, but had not materialized due to low commodity prices. Other interventions made reference to ongoing rail projects including the extension of the Central Corridor from Lusaka (Isaka) to Kigali and Burundi, the upgrading of the Northern Corridor from Mombassa to Kampala and beyond, and the Lamo Corridor linking Lamo with Southern Sudan and Ethiopia.

13. Questions on sustainability of the programme in terms of renewing and maintaining infrastructure were raised. In response, it was noted that national road authorities were in place and, through fiscal measures, adequate resources could be mobilized to ensure constant maintenance, upgrade and modernization of roads. There was also an initiative in place called 'transit road user chargers' led by SADC on behalf of the Tripartite alliance. SADC was producing recommended guidelines for the region and many countries already had 'transit road user chargers' in place (US$10 per 100km). The problem was that the recommended charges contained in the guidelines (already adopted), had not been accepted by some Members. The funds out of the road user charges were expected to go back into road maintenance. Unfortunately the RECs still did not have enough authority at the regional level to ensure that maintenance occurred throughout the region.

14. References were also made to energy generation, in particular the Southern African Power Pool Master Plan, which linked Cape of Good hope to Tanzania; the East African Power Pool, which linked the five EAC partner states; and the East African Power Pool, which linked the EAC countries with Ethiopia and Sudan. It was noted that the RECs were considering merging the two East African

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plans as it made more economic sense. Consideration was also being given to looking at linking the Southern African Power Pool with the East African Power pool so that when there was a deficit on one side, power could be released from the other. It was hoped that the linkages would be in place by the end of 2010.

15. In reply to questions on the on-going momentum on this project, it was noted that every two months the RECs held a video conference with development partners requesting details on the status of processing of individual projects, disbursement timelines, etc. It was remarked that putting in timelines that were client-driven and demanded by the donors was the way to proceed.

16. Comments were also made in relation to the several other trade corridors under development elsewhere in Africa, including the Abidjan-Lagos Corridor in West Africa and the CEMAC Transport Corridor in Central Africa. The ECOWAS Secretariat provided some information on the regional projects underway including the West Africa Power Pool Project, the Common Policy on Agriculture, the Common Industrial Policy, Regional Policy on Competition, Regional Policy of Investment.

B. GREATER MEKONG DELTA SUB-REGION

1. The Session began with a short film which introduced the successful developments arising from cooperation in the Greater Mekong Subregion (GMS).12 The Moderator, Mr. Ganeshan Wignaraja, Principal Economist, Office of Regional Economic Integration, Asian Development Bank, recalled that the GMS Program had started in 1992 as one of AsDB's flagship initiatives supporting trade and economic development in Asia's least-developed sub-regions, comprising Cambodia, the People’s Republic of China (PRC), Lao People's Democratic Republic (Lao PDR), Myanmar, Thailand, and Viet Nam. The programme focused on financing and providing technical support for sub-regional projects and offered many lessons. The purpose of the break out Session was threefold: (i) to discuss the impact and evolution of the GMS project and how it had enhanced trade in one of Asia’s least-developed regions; (ii) to examine priorities and developments in the overall GMS project that had emerged since the 2007 Asia-Pacific Regional Review; and (iii) to discuss constraints and next steps forward in improving the financing and technical support of GMS projects.

2. Mr. Cham Prasidh, Senior Minister and Minister of Commerce, Cambodia , said that Cambodia had received considerable benefits from the GMS projects, in particular the infrastructure projects which had had a positive impact on economic development and poverty reduction. An example was the Phnom Penh-Ho Chi Minh City Highway where there had been an increase of approximately 41 per cent per annum in trade passing through the Bavet/Moc Bai border between 2003 and 2006. New residences, shops and leisure facilities had been established and travel time from Phnom Penh had been reduced by 30 per cent. Transport and customs formalities had been simplified for cross-border trade between Cambodia and Vietnam which, in turn, had eased the crossing of goods and persons. Trade between the two countries had reached US$1.1 billion in 2008, an increase of 40 per cent from the previous year. Both sides were committed to boosting trade further through deeper reform and the harmonization of customs procedures under bilateral and GMS frameworks. Of the challenges remaining, one included the need to link the Phnom Penh-Ho Chi Minh City Highway to other road networks. Ports also needed to be upgraded. In addition, Cambodia still faced a lack of human capacity, technology and financial support to implement some GMS projects. In the current economic crisis, it was essential for countries such as Cambodia to continue to benefit from Aid for Trade.

3. Mr. Arjun Goswami, Head of Regional Cooperation Integration Group, South East Asia Department, Asian Development Bank, recalled that the strategic priorities of the GMS initiative concerned connectivity, competitiveness and community. There had been a huge increase in

12 Further information is available at: http://www.adb.org/GMS/default.asp

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connectivity (i.e. transport corridors) since the initiative was launched in 1992. On competitiveness, there had been many efforts to simplify and enhance cross-border commerce, for example, through trade facilitation and the Cross-Border Transport Agreement (CBTA), the GMS Business Forum (which allowed private sector input into sub-regional investment) and through the promotion of agricultural exports. With regard to the community aspect, the GMS countries had jointly addressed shared concerns such as communicable disease control, promoting safe migration, promoting the GMS as a single tourist destination, and building capacity for development management.

4. The Asian Development Bank had a multifaceted role in the GMS initiative: as financier, honest broker and coordinator/secretariat. By the end of the 2008, the AsDB had mobilized US$11 billion for 41 infrastructure projects in the GMS and US$208 million for 179 technical assistance projects. Efforts had also been made to deepen partnerships with governments, donors, academia, civil society, and the private sector. Implementation of the GMS initiative had led to benefits such as savings in travel time and costs, increases in trade and border crossings, improved access to schools and safe water, and decreases in poverty. With regard to challenges for the GMS going forward, the current economic crisis was of concern. There was a need for continued investments in infrastructure relating, for example, to multimodal transport (road and rail) and energy. There should also be an increased mobilization of private investments for the GMS programme, including through public-private partnerships. Transport corridors needed to be transformed into economic corridors, with towns and other development projects, and trade facilitation needed to be improved. There should be an enhanced focus on "soft" areas such as communicable disease control, sustainable tourism development, and flood and drought management.

5. Mr. Oudet Souvannavong, Secretariat-General, GMS Business Forum Secretariat (GMS-BF) , said that in spite of the recent improvements in the trade and investment regimes of the GMS countries, impediments were likely to persist. There was a need for the public and private sectors in the GMS to focus their collaborative efforts on a number of pressing concerns. However, private sector organizations were not always consulted or involved in the conceptualization, planning and implementation of Aid-for-Trade projects. One of the major achievements of the GMS Business Forum had been the organization of a series of GMS conferences and working groups, with the support of GMS governments, private investors, AsDB, the United Nations Economic and Social Commission for Asia and the Pacific (UNESCAP), and other development partners, to address the key concerns and issues related to trade and investment in the region. The GMS conferences were a platform for public-private dialogue. More generally, the GMS-BF was developing a needed public-private partnership. The GMS business community had actively discussed ways by which it could help address the constraints to cross-border movement of goods in transit across the GMS. As a result, the GMS-BF had proposed the creation of a GMS freight transporters' association at the regional level, which would perform the role of harmonizing and coordinating the accreditation and licensing of transport operators using the GMS corridors. The GMS-BF had also proposed to develop a practical strategy for SMEs to participate in global value chains. Since the lack of access by SMEs to credit for financing their exports was a major constraint to their ability to participate in the export market, the GMS-BF saw the need to help them address this problem by the use of a scheme to encourage banks to lend to SME exporters and export suppliers.

6. Mr. Arin Jira, Chairman, ASEAN Business Advisory Council , said that governments should be at the forefront of development strategies, whilst at the same time ensuring that industry had its say. Given that it was the private sector that was involved in international trade, governments must ensure that the private sector was involved in the dialogue relating to trade. GMS countries could benefit from pooling their resources and sharing their expertise since they shared common interests and should work towards developing a common vision. Among the work still to be done in the GMS was the need to develop a credit financing scheme for SMEs. More effort needed to be put into integrating GMS countries in value chains, thereby linking them to ASEAN and the global

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marketplace. There should also be more focus on developing tourism, and human resource development should be pursued.

7. Mr. Go Shimada, Director, Trade, Investment and Tourism Division, Industrial Development Department, Japan International Cooperation Agency (JICA), said that Aid for Trade accounted for over half of JICA’s total ODA loans. Asia and Africa were the main regions for JICA's Aid-for-Trade strategy. Cambodia, Lao PDR, Myanmar, and Vietnam (CLMV) were JICA's main focus in the ASEAN region. In particular, 52 per cent of JICA's Aid-for-Trade related technical cooperation projects and capital grant aid went to CLMV. The same was also true for JICA’s Yen loans of which 56 per cent went to CLMV. In the GMS, assistance for building productive capacity was provided through technical cooperation and grant aid, while assistance relating to economic infrastructure was through loans. Economic infrastructure was JICA's major area of cooperation in the GMS, accounting for 100 per cent of ODA loans and 34 per cent of grant aid including technical cooperation. A large part of grant aid including technical cooperation went to building productive capacity. JICA would continue its current endeavours to mainstream Aid for Trade which was crucial for donor agencies and enabled them to link efficiently to the development strategies of partner countries. JICA would remain committed to Aid for Trade as its operational base.

8. Li Guangling, Deputy Director-General, Ministry of Communications, China , stated that the full and effective implementation of the Cross-Border Transport Agreement (CBTA) between the GMS countries would provide many benefits. However, some GMS countries still needed to improve their road and border crossing facilities. Moreover, although several annexes and protocols of the CBTA had been signed, only four countries had accepted or ratified them. Even the countries that had ratified the documents still had some difficulties in implementation. While all GMS countries should expedite the construction, improvement or upgrading of their roads and border crossing facilities within their own capacity, the AsDB should continue its technical and financial assistance. Other international or regional financial institutions should be urged to provide technical and financial assistance and support to the GMS countries, particularly the LDCs. Other development partners and the private sector should also be encouraged to participate in the transport infrastructure development of the GMS. Countries that had not yet ratified the annexes and protocols of the CBTA should be urged to do so as soon as possible. All GMS countries should be urged to conform, where necessary, their relevant national legislation with the contents of CBTA and its annexes and protocols as soon as practicable. The AsDB should continue its technical assistance and coordinating efforts in GMS economic cooperation as a whole and in CBTA-related matters in particular.

9. Mr. Phillippe Allen, Minister-Counsellor, Australian Agency for International Development (AusAID), said that Australia’s development assistance programme in the GMS included around US$150 million of transport and energy projects. The objective of these projects was to create better conditions for trade in the subregion. Support was delivered through partnerships with the AsDB and the World Bank. Australia supported the CBTA. In partnership with the AsDB, it was funding activities in support of greater cross-border trade, including the training of customs officials at border posts, the streamlining of paperwork to be completed at border crossings, and the provision of border post ICT equipment. It was also considering a multi-year funding arrangement to support the CBTA. In terms of the future direction of its infrastructure support, Australia was investigating with the AsDB the feasibility of a major new bridge in the Mekong Delta and a project to rehabilitate the national rail system in Cambodia.

10. Mr. Hervé Gallepe, Manager, Commercial Capacity Development Programme, Agence Française de Développement (AFD), said that AFD's strategy vis-à-vis the GMS focused in particular on LDCs, assisting these countries to better integrate into the region. AFD contributed to projects in areas such as agriculture, agro-industry, natural resources and energy. AFD had a focused approach with regard to Aid for Trade specifically, notably through its "Programme de Renforcement des Capacités Commerciales" (PRCC). Through the PRCC, trade-related support had been provided to

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GMS countries, for example by helping to develop the exports of Cambodian textiles or Laotian coffee. AFD was also working with GMS countries to develop geographical indications and place value on their products internationally. The GMS could benefit from encouraging synergies between firms, sharing techniques and experiences. What might already be done at national level in this regard could be broadened to the sub-regional level.

11. In response to a question concerning what African countries could learn from the GMS, Mr.   Prasidh suggested that the sharing of experiences would be useful. He cited the example of rice cultivation, although at the same time cautioned that different varieties of rice were grown in different parts of the world. On a question concerning the relationship between the CBTA and the ASEAN agreements, a distinction was made between them by Arjun Goswami and Li Guangling. It was also suggested that the GMS pilot areas could give a push to the ASEAN process. Regional cooperation and the synergies it brought about could yield important benefits. Corridors could yield big economic gains, but there was also a need for an appropriate enabling environment and a mechanism to address risks. Public investments were crucial in themselves, but could also stimulate private investments. Public-private partnerships were of fundamental importance, and private sector participation must be encouraged. Donor coordination in order to target projects to countries'/regions' needs – and to avoid overlap – was necessary, as was the importance of beneficiary country ownership. Aid for Trade was a long-term story. The GMS initiative began 17 years ago and, like other Aid-for-Trade initiatives, must be properly nurtured to fulfil expectations in the long term.

C. INFRASTRUCTURE AND INTEGRATION CORRIDORS IN LATIN AMERICA

1. The Session began with a short film which introduced the Mesoamerican Integration and Development Project.13 By way of introduction to the Session, the Moderator, Mr.   Antoni Estevadeordal, Manager of Integration and Trade, Inter-American Development Bank (IaDB), said that integration in Latin-America was one of the main focuses of the IaDB's Aid-for-Trade efforts in the region. The current trade agenda still required a lot of work, especially on the issue of convergence between the different regional trade agreements. This convergence work was even more complex than negotiating the agreements themselves. However, he said the Session would focus more on the hardware side. In this regard, there was a clear need to develop infrastructure in the region. Average cost of merchandise transport in Latin America were still on average over 50 per cent higher than costs in Europe. Clearance costs were also high and needed to be reduced.

2. In her presentation, Ms.   Karla Gonzáles Carvajal, Minister of Public Works and Transport, Costa Rica, explained that the Mesoamerica Project (MP) – formerly the Plan Puebla-Panama – was a project to upgrade the transport infrastructure from Mexico to Colombia. She said that intra-regional trade in Central America was growing and infrastructure must be improved to keep up with this growth. The MP included the improvement of ports and airports in the region with the aim of improving port efficiency which on average was very low. Road safety was a priority in the political agenda of Central America and central to the MP was the creation of an International Mesoamerican Road Network (RICAM). The aim of the RICAM was to develop regional integration economic corridors, respect regional natural resources and decrease travel times. The RICAM would consist of four corridors, namely the Pacific Corridor, the Atlantic Corridor, the Inter-Oceanic Corridor, and the Tourist Corridor. The Pacific Corridor would be mainly oriented towards merchandise transport connecting the principal development poles, and the Atlantic Corridor would promote regional economic development and tourism. In addition, there would be significant investment made in improving customs along the corridor with the International Merchandise Transit (TIM) project. A pilot TIM plan between El Salvador and Honduras had reduced average border crossing times from 61 minutes to eight minutes. Another objective of the MP was to move towards multimodal transport with the development of rail network in the region. She added that infrastructure development was a

13 The film can be viewed at: http://www.proyectomesoamerica.org/

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natural ally of regional trade agreements and facilitated the even distribution of gains from regional trade.

3. Mr. Arturo Barrio, General Director of the Mesoamerican Project, Ministry of Foreign Affairs, Mexico, explained that the Mesoamerica Project consisted of projects with social objectives (public health, sustainable environment, territorial information (natural disaster prevention) and social housing) and economic goals (road infrastructure, energy (electricity and biofuels), telecommunications integration, customs modernization and competitiveness indicators). The value added of the MP was political dialogue, regional integration, setting of common priorities, resource management (cooperation and financing) and regional public goods. In addition, it promoted ownership, coordination and participation.

4. Mr. Flavio Soares Damico, Minister Counsellor, Deputy Permanent Representative, Permanent Mission of Brazil, Geneva, said that the South American Regional Infrastructure Integration Initiative (IIRSA) aimed to achieve the physical integration of 12 Latin American countries via the development of geo-economic axes focusing on transport, telecommunications and energy. IIRSA consisted of 10 axes of integration: Andean, Amazonas, Peru-Brazil-Bolivia, Capricorn, South Andean, South, Parana-Paraguay Waterway, Mercosur-Chile, Central Interocean and Guayana Plateau. In order to fulfill its objectives, a portfolio of 348 infrastructure projects, clustered in 41 project groups, had been set up which comprised investments of US$38 billion. A "Consensus Agenda" had been established which consisted of 31 projects having the largest impact on regional physical integration which required an investment of US$6 billion. One example of the IIRSA was the Axis-Peru-Bolivia which would provide a connection between Brazil (states of Acre and Rondônia) and Peru enabling the flow of passengers and transport of commodities within this region and with regional and international markets, including Asian markets. The completion of the Axis-Peru-Bolivia was expected in 2010. IIRSA had a three-level decision-making structure: (i) an Executive Committee comprising planning and infrastructure ministers appointed by Governments which defined work strategy and approved action plans; (ii) Technical Executive Groups comprising senior officials and experts appointed by Members, which was in charge of debating specific issues and multilateral actions; and (iii) Technical Coordination Committee comprised of representatives from the IaDB, CAF (Corporación Andina de Fomento) and FONPLATA (Fund for the River Plate Bassin) acting as facilitators and coordinators of joint activities.

5. Mr. Esteban Piedrahíta Uribe, Director General, National Planning Department, Colombia , informed that since the beginning of the 1990s Colombia had mainstreamed trade and integration into its development strategy. Developing countries needed Aid for Trade but were only marginal recipients and what little Aid for Trade was received needed to be used efficiently. Without real market access Aid for Trade was worthless. After realizing its inadequacy to cope with its trade growth, Colombia had embarked on a trade infrastructure improvement project. This had involved investment in road networks, airports, railroad networks and ports. Colombia scored below average in its competitiveness indicators and Aid for Trade in the Latin America region was very low compared to the region's needs. Of the Aid for Trade destined for the Latin American region, Colombia received only nine per cent which was similar to the amount destined for Bolivia, but half that of Peru. Colombia participated in both the IIRSA and the MP and it had also put in place a programme to assist SMEs with their exports by post and was implementing an agreement on South-American roaming.

6. IIRSA demonstrated that initiatives of this kind facilitated economic integration, reduced regional logistic production costs, facilitated access to areas of high productive potential, and took advantage of complementarity of existing geo-economic spaces. Challenges that had been highlighted included generation of infrastructure and logistics for a discontinuous territory, favouring territorial development planning, articulating infrastructure to other initiatives that were part of the development of productive systems, building a common agenda of projects and actions oriented towards

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integration, and guaranteeing balance of emphasis in development of infrastructures for land, sea and river transport, energy and communications. As a middle-income country, Colombia was not a large Aid-for-Trade recipient, but it supported special and preferential treatment for LDCs. Challenges faced by developing countries were not very different from those faced by LDCs. Aid-for-Trade flows should be increased while strengthening South-South cooperation and facilitating access to available Aid for Trade. Guaranteed real market access for exports of developing countries was the main source of Aid for Trade.

7. Mr. Rodolfo Rieznik, Director, Endesa S.A. , provided information on the Central American Electrical Interconnection System (SIEPAC - Sistema de Interconexion Electrica para America Central) project which concerned electrical regional integration and the creation of a regional wholesale electricity market (MER) in Central America. The project involved the construction of a 1,796 km long regional electricity interconnection line running from Panama to Guatemala and also the implementation of a regional optic fibre network. SIEPAC, which was a successful regional integration initiative with public and private sector involvement as well as participation of multilateral financing organizations, would directly and indirectly develop regional and sectoral trade. The inception of the MER in 2010 would be the first non-commercial productive integration action in the region. The greatest challenge for SIEPAC was the difficulty experienced by governments to cede sovereignty in favour of integration. Its benefits would include reduced prices and costs of electricity as well as increased efficiency, security and reliability in energy generation and transport.

VIII. SESSION 7: AID FOR TRADE – ASSESSING IMPACT AND EFFECTIVENESS

1. The Session began with a short film which showcased an Aid-for-Trade success story in Belize where assistance to control an agricultural pest – the fruit fly – had opened market opportunities for papaya export to the United States.14 The development of papaya and other fruit exports had generated income and employment opportunities in the agriculture and food-packing sector and employment opportunities had been created for low-skilled female labour.

2. The Moderator, Mr.   Mark Gawn, Counsellor, Permanent Mission of Canada to the WTO and Integrated Framework Board Member, said that the film was illustrative and highlighted issues that needed to be addressed when assessing impact and effectiveness of Aid for Trade which fundamentally was about people and their livelihoods. He proposed that the Session therefore focus on the issues raised in the film, namely, how tackling supply-side constraints could improve trade performance, generate economic growth and employment – including for female workers –, and the importance of individual countries' commitment, and resulting economic value. The aim of the discussion was therefore to provide a better understanding of what was being accomplished in the area of Aid for Trade, what the successes and failures were, and what lessons could be learnt.

3. Responding to the Moderator's question about ODI's work for SIDA (Swedish International Development Agency) and DFID (UK Department for International Development) on conceptualizing the links between Aid for Trade and poverty reduction, Ms.   Kate Bird, Overseas Development Institute (ODI), highlighted how trade opportunities were experienced differently by people in different sectors and different parts of the country. The focus of ODI's work had been on behind-the-border constraints. As an example of such a constraint, she said that although international access to markets was generally improving, problems still existed in the agricultural area, particularly for low-income developing countries. She highlighted the fact that Aid for Trade had the potential to address and reduce these constraints as was evidenced by the case studies that ODI had done which showed that Aid for Trade was in many ways delivering. Further elaborating on the issue of process, she said that the first step was to identify the binding constraint. In other words, what was the barrier, what was stopping people from being able to access national markets and international markets. Once that

14 The film can be consulted at: http://www.wto.org/english/res_e/webcas_e/trading_safely_e.htm

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barrier had been addressed, the next step was to identify the proper entry point and intervention. Should the intervention be at the national level, for example the Trade Swap in Cambodia, or was it to be a smaller project, focused on a particular sector and perhaps in a particular place. It was also important to gauge what opportunities would be available to developing countries if those constraints were relieved. If implemented properly in a sequenced manner, Aid for Trade could reduce constraints and allow people to capture those opportunities. It could increase income and government tax so that governments could spend money more effectively in the social sectors and compliment Aid-for-Trade activities.

4. Ms. Bird concluded by giving examples of Aid-for-Trade projects studied by ODI. In Lesotho, a programme in the textile and apparel sector had created jobs, particularly for poor women who constituted 85 per cent of the workers, by encouraging diversification and building the sector's productive capacity. In Ethiopia, a trade marketing and licensing programme in the coffee sector had helped producers of three premium coffee varieties to get higher and more stable prices. In Cambodia, the Trade Swap was implementing a trade strategy which had mainstreamed poverty reduction by encouraging an 'all-of-government approach' for development in the trade area. Various cotton case studies, including The Cotton Made In Africa Project, The Better Cotton Initiative, and the Lango Organic Cotton Project in North Uganda, had aimed to increase income of producers and provide them access to more stable markets. The key message demonstrated by these projects was that Aid for Trade could work both in terms of reducing poverty and increasing the volume and value of trade.

5. Focusing his next question on East Asia, the cradle of the export-led model of development which had done so much to lift millions out of poverty, the Moderator asked Shamika Sirimanne to share the results of UNESCAP's research. He asked whether export growth in itself was enough, or did the broader national policy environment need to be thought about when trade was being mainstreamed in international development, and whether accompanying measures were needed to ensure benefits were shared.

6. Ms.   Shamika Sirimanne, Chief, Trade Facilitation Section, Trade and Investment Division, UNESCAP, responded by saying that East Asia's export-led growth "miracle" was a classic example of trade delivering growth and then that growth delivering poverty reduction. Basically, therefore, export trade was good for the poor. However, this export trade had not been achieved by mainstreaming trade, it had just happened; it was a market-driven result. She explained that East Asia was not a natural resource-based region. The resource the region had in abundance was labour, and in the 1960s, when the "miracle" had started, this was unskilled labour. The export sector was naturally more intensive in unskilled labour. It provided better paid jobs for poor people which had led to a huge reduction in poverty.

7. The research being done at UNESCAP showed that the situation had changed. The link between export growth and poverty was no longer so automatic. Trade or export growth did not automatically reduce poverty. Much work still needed to be done to reduce poverty. Looking at East Asia, the export composition was now much more skilled which meant that unskilled labour in terms of product was no longer being exported. Poverty in the East Asia region was largely a rural agrarian phenomena; exports did not touch the millions of rural people's lives. She said that in the East Asia Pacific region there were over 600 million people living in abject poverty with below US$1 per day. And 70-80 per cent of the poor made a living out of agriculture. So, to reduce poverty, the predicament of agriculture needed to be addressed. Governments needed to mainstream not just any kind of trade but mainly pro-poor trade which had to have a focus on agriculture. Either exports had to go to agriculture, or agriculture had to release people to export sectors. She acknowledged that this was a challenge since it was not easy to mainstream pro-poor trade strategies as it brought an additional complexity to mainstreaming trade in general.

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8. As an example, Ms. Sirimanne cited the case of India where 10-15 per cent of the world's vegetables were produced, but less than one per cent of the world's exports came from India. For South Asia that figure was 40 per cent. Half of agricultural produce was lost going from the farm to the local market. Standards was also another barrier. Some of the quality standards were very prohibitive and there were numerous permits and certificates to be dealt with for clearance. Also a major hindrance was the lack of cooling facilities to move the produce from the farm to the port. In terms of process for exporting perishable products in the East Asia region, customs clearance was the easiest part. Other constraints existed once the goods were on the ship. One example was confinement. If the products were perishable there was no value on the goods until the importer opened the consignment and verified that it was worth the price asked. This meant that farmers could not get insurance or trade finance because consignments did not have a value. She concluded by saying that Aid for Trade had a huge potential to address these constraints but that for export to reduce poverty for the region, the condition of Asian agriculture had to be addressed.

9. Mr.   Pradeep Mehta, Secretary-General, CUTS , continued the discussion on the linkage between trade and poverty drawing from a study by CUTS International which examined the issue in detail based on case studies from various countries. He stated that several factors were involved in the linkage between trade, development and poverty. One of the issues addressed in the CUTS project was the impact of trade openness on development and poverty reduction. The conclusion was that this depended entirely on different countries' specific conditions. It could not be homogenized, nor seen as one-size-fits all. The project had outlined three conditions and complimentary policies of the East Asian Export success story. To enable countries to exploit the synergies between trade development and poverty issues, complimentary policies such as human capital formation, social safety and infrastructure were very important.

10. Referring to one particular case study from the project, he informed that up until the European Union (EU) export bans in 1997, the EU had been the largest export market for Tanzanian fish. After the export bans, the EU had investigated the whole fish supply in East Africa and had rectified the constraints by helping three countries (Uganda, Tanzania and Kenya) set up facilities for testing and standardization. As a result, there was a marked improvement in fish exports from the East African region. Another area on which the study had shed light was what national governments themselves did in order to ensure that whatever aid they were receiving – in terms of both technical assistance and money – was utilized efficiently and aligned to their own policy. Tanzania, for example, had a development strategy, which included a national investment policy, to encourage more investment in fish. Royalties on fish exports with the government was directed exclusively towards fishery research and infrastructure development. As a result, the foreign exchange earnings on fish exports grew from US$62 million in 1996 to US$92 million in 2004. By 2006 the fisheries sector in Tanzania contributed about ten per cent of GDP. Aid for Trade had a role in this success story through building the productive capacity of the fishery sector. During 2000-2006, the fishery sector had received financial support of US$10.5 million. This figure was approximately 7.35 per cent of the total support given to building productive capacity in Tanzania. In conclusion, he said that one of the lessons learned from the study was that, whether by default or design, when donor support was directed to a specific sector in a comprehensive manner and on a long-term basis the result was likely to be positive.

11. Addressing the linkages between export demand, gender issues and poverty reduction, Ms.   Bansari Nag, Gender and Trade Initiative , stated that trade openness itself did not eliminate existing inequalities in resources, power and decision-making between men and women. She explained that failure to address these inequalities reduced the potential of those engaged in the production process and thus restricted trade. Due to increasing competition in the area of international trade, the supply chain had been expanding and production risk was now being transferred to the lower end of these chains. As the case of Belize showed, the lower end of the supply chain was in the informal sector where the majority of workers were women. An economic

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downturn could have an adverse effect on this sector where the workers were already in a highly disadvantaged position in terms of resources, power and decision making.

12. In the area of trade openness and in the context of the gender issues, challenges remained which varied in different sectors and for different countries. In the mining sector in India, for example, a large number of young women had been involved in the production process. Most of them, however, remained vulnerable because they were either "own account" workers or workers who had been hired on an unpaid family work basis. The International Labour Organisation considered the young women work force as the most vulnerable since they did not have access to social security or other safety nets.

13. Another problem identified was the disparity in wages between men and women which had serious repercussions in terms of access to family health and food security. The impact of an economic downturn had disproportionately affected the debts of women who were engaged in certain important sectors without any social security or access to maternity and health benefits. The rights of these women with regard to property, education and health was adversely affected. She then referred to a 2008 UNCTAD report that stated that ODA investment towards social infrastructure – which included education, health, population programmes and sanitation – had been increasing. This was a positive sign since development encompassed human indicators. Efforts to measure development should therefore include human development indicators.

14. The Moderator then turned to the issue of monitoring and evaluation frameworks and asked the OECD to provide an overview of how result-based management – one of the core principles of the Paris Principles on Aid Effectiveness – related to monitoring Aid for Trade.

15. Mr.   Frans Lammersen, Principle Administrator, Poverty Reduction and Growth Division, Development Co-operation Directorate, OECD, explained that management for development results was one of the five core principles of the Paris Declaration aimed at delivering aid more effectively. The development community had been giving aid for over 30 years and the ongoing debate was whether aid was the solution to all problems, in which case the volume of aid should be significantly increased, or whether it was the main problem, in which case all aid should be ended.

16. Some economists argued for a more balanced approach when referring to accountability. Local solutions in local circumstances needed to be tested to see what worked best, and then, on that basis, move forward. Discussions should be evidence-based, focusing on where aid could really have an impact. The decision by the Aid-for-Trade Task Force to use the Paris Declaration on Aid Effectiveness as the guiding principles for the Aid-for-Trade initiative was very wise because the initiative was not only about money. An important central component of the Paris Declaration was ownership. In other words, developing countries should own their development strategy and, in some countries, trade should be an important component of that strategy. In other countries, trade was not an important component of the development strategy. In post-conflict states, for example, the creation of peace was probably took precedence.

17. Donors should take into account strategies identified by recipient countries as priority areas in need of trade-related capacity. They also needed to harmonize procedures amongst themselves and try to build on recipient's existing procedures. In other words, the essential component of the Paris Declaration was "Management for Development Results". To deliver development results, all stakeholders together – partners, donors and partner countries – needed to discuss priorities and how development aid could make a difference, and identify targets to be achieved. Evidence from field studies could be used to see what was really happening on the ground, which programmes were most effective and which needed to be adjusted.

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18. Addressing the Moderator's question as to how UNECA planned to evaluate the impact of assistance to Africa, Mr.   Stephen Karingi, Chief, Trade and International Negotiations Section, Trade, Finance and Economic Development Division, UNECA said that it was important not to forget some of the principles that had come out of the 2007 Regional Reviews of Aid for Trade because, at least for Africa, the regional dimension of Aid for Trade was crucial. It was on this basis, therefore, that UNECA had decided to take the data and statistics produced by the OECD and try to asses what they meant for Africa.

19. Mr. Karingi said the challenge lay in demonstrating the increase in Aid for Trade and determining whether it was having a positive impact and contributing to better trade performance. This question could be tackled at different levels. First, how could UNECA coordinate the Aid-for-Trade supply to the target beneficiary. Second, identification of the impediments that made it difficult for Africa to trade. And, third, tracking positive correlations between Aid-for-Trade supply and improvement in competitiveness. It was also important to determine whether there was a correlation between Aid for Trade in different sectors and changes in the logistics performance indices that were produced to measure the difficulties of trading within Africa and between Africa and the rest of the world. It was necessary to see from the indicators whether the impediments targeted by Aid for Trade were having a positive contribution towards improving African countries' trade performance.

20. In conclusion, he said that the biggest challenge was to prove that in five or ten year's time current Aid-for-Trade supplies would have had a positive impact in reducing poverty. Poverty reduction was not automatic. It depended on how growth was distributed between different sectors taking into account what factors of production were being used at a given time.

21. Responding to the Moderator's question on the issue of accountability of donor assistance to the European Parliament and EC member States, Ms.   Liselotte Isaksson, Policy Advisor for Trade Development Issues, Directorate General for Development and Relations with African, Caribbean and Pacific States, European Commission, said that the EC focused on reducing poverty, by working through the dynamics of markets rather than on trying to support poor people directly through projects. Building schools in rural areas was one such example. The EC had multiple internal systems for controlling disbursements of funds to ensure that expenditure was justified, especially when a large share was going on overheads. The EC was also beginning to look at programme and thematic evaluations. How the impact of Aid for Trade was monitored was still a challenge that one donor alone could certainly not deal with. There was therefore a need for common and shared monitoring efforts. In moving forward, it was necessary to look more closely at country- and region-based monitoring. In this respect, it would help if a clear difference was made between the monitoring of impacts of projects and programmes and the measuring of impacts of policies and strategies that were supposed to govern those programmes. Although these issues were interlinked, they were not the same. In conclusion, she said it was necessary to look at both the impact of programmes and the impact of policies and that this could not be done if all were not working together to avoid conflicting policy.

22. Following-up on the discussion on accountability and evaluation, Mr.   Thomas Feidieker, Adviser, Globalization, Trade and Investment Division, Federal Ministry for Economic Cooperation and Development, Germany, said that for Germany measuring the precise impacts of Aid for Trade was of utmost importance. Much needed to be done to elaborate and fine-tune a set of indicators and the working hypothesis for further consideration was that donors and partners would need a set of indicators to evaluate Aid-for-Trade programmes and to measure trade capacity. Only with positive results were donors able to justify and mobilize additional resources. From a partner-country perspective, the economic development goal was to raise trade performance. In this area, the OECD country fact sheets on trade performance indicators needed further improvement and this could easily be achieved.

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23. What was important and of particular interest for developing countries was measuring trade capacity. The term trade capacity encompassed, first, the ability to make the most effective use of donor contributions, and, second and more important, the ability to use Aid for Trade as a powerful leverage to reorganize and optimize existing political processes as well as to economize external and internal resources. The aim was equally to raise the capacity of the public and private sectors so that they could continuously and sustainably improve their trade capacity and augment developing countries' ability to create and effectively apply their own trade strategies.

24. Referring again to the OECD country fact sheets, he said there was a missing intermediate level. The fact sheet was structured in five main parts, namely, basic indicators, aid flows, trade mainstreaming and priorities of partners, trade policy indicators, and trade performance. With respect to trade policy indicators, the fact sheet contained only a few indicators. With regard to evaluation of Aid-for-Trade measures and measuring trade capacity, he noted that when obtaining indicators not every area had the same relevance. He said that Aid-for-Trade flows, trade policy indicators, and trade performance should be at the center of the debate.

25. The guiding principal for further elaboration of intermediate indicators was to cluster Aid-for-Trade flows (inputs) by attaching flows to sectors below the single Aid-for-Trade categories (for example, in Trade Development – i.e. banking, business support, fishery, forestry, industry, mining, tourism). The next step was to link sectoral Aid-for-Trade flows with concrete fields of intervention (i.e. the processing and functional level of measures – for example, public or private entities, and regional or national level). This was the decisive area where intermediate indicators could be generated along impact areas of Aid-for-Trade flows such as, for instance, the regulatory environment, institutional and trade capacity, competitiveness, and supply-side constraints. Examples of impacts contributing to partner country-specific targets included the outcome level to be achieved in the field of economics (i.e. improvement of trade performance and growth), and the outcome level in the social area (which included poverty reduction and gender aspects, including the creation of improved income-earning opportunities for disadvantaged populations or in remote areas). In conclusion, he said that additional efforts were needed to establish a set of distributional, poverty-related and ecological indicators on the outcome level of development goals. These needed to reflect pro-poor growth, income inequality, labour force, gender, and ecological aspects.

26. The Moderator then asked the World Bank for its views on what it thought could be learnt from these evaluation studies and what lessons could be learnt for assessing impact and effectiveness of Aid for Trade.

27. Mr.   Bernard Hoekman, Director, International Trade Department, World Bank , said that, for the Bank, evaluation and assessment were a continuous process which started with an ex-ante review regarding quality at entry in terms of projects. Also extremely important was whether the diagnostic analysis was being done in the correct manner (e.g., were binding constraints being addressed?; or, would the projects and project designs address the problems that had been identified?). The Bank answered such questions through a Mid-Term Review Evaluation Mechanism within the framework of the Quality Assurance Group which monitored and evaluated the pre-completion of projects so that the assessment of impact was made easier and necessary adjustments could be made before the project was completed. This process was then followed by an ex-post assessment from which one could learn, from experience, what worked and what did not work. The Bank had realized that its evaluation mechanism made it much easier to evaluate specific projects as opposed to programmes, budget support, or technical assistance. A lot of Aid for Trade, of course, dealt with technical assistance which made it more difficult to monitor impact which, ultimately, would only happen after many years. The implication, therefore, was that there was a need to design a specific evaluation framework which took this into account and which monitored over time what actually was the effect of the intervention. The objectives of what was to be achieved should be very clear in order to assess whether those objectives had been achieved, and if not, why not. To dispel concerns about personal

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responsibility that many people had, a key element was to de-personalize the assessment process. This could be done by creating what the Bank referred to as "a culture of evaluation" whereby no personal responsibility was attached to something that was done or needed to be done.

28. There was also a need to build on the resources required to collect data. One necessary condition, for example, was to have a baseline against which outcomes could be measured and, once the project had been completed, the necessary resources available to collect the data that would assess whether progress had actually been made in terms of what that baseline was.

29. From an economist's point of view, Aid for Trade could be thought of as a production function meaning there were outputs which were going to be a function of inputs. As far as Aid-for-Trade outputs were concerned, he said it was important to make a distinction between "direct outputs" (e.g., what were the specific objectives of a particular project, which could range from reducing costs to diversifying exports to reduce the sensitivity of the economy to shocks), and "outcomes of the direct output" (e.g., whether there was going to be a reduction in poverty or more employment for women). Many projects might, in general, be able to achieve these broad objectives. However, the outcome side of the equation was dependent very much on complementary policies which included key elements such as the micro-economic framework, the business environment, and the investment climate. It was important to have a broader view of what needed to be done and to be flexible in terms of attributing outcomes to particular projects. However, as far as projects were concerned, the Bank's experience was that one needed to define upfront what one was trying to achieve and then measure whether that actually had been achieved.

30. The Moderator then opened the floor for comments.

31. The representative of Nepal expressed puzzlement with regard to the conditions set by developed countries in relation to the financial agreements for technical assistance arrangements. Nepal, for example, had a project whose expenditure was as follows, 60 per cent went to the resource person; 11 per cent to each initial development; three per cent for the project's goods process; 13 per cent for consultants; and seven per cent was miscellaneous, and he asked whether this provision helped reduce poverty and whether it helped supply-side capacity? He informed that Nepal's status had changed from a poor exporting country to a poor importing country. Aid for Trade was a positive initiative for trade, debt and balance-of-payment problems. It was also an initiative for integration and priority, but donors needed to look more closely at the systems established to help alleviate the problems faced by developing countries.

32. The representative of Kenya said that, while Kenya appreciated the role that standards played in ensuring the quality of products for consumers, those standards turned out to be moving targets and complicated all the behind-the-border constraints that were associated with trade in that sector. He therefore asked how facilitating trade could be balanced, while at the same time ensuring that it did not become a moving target that gave congruence to supply-side constraints.

33. The representative of Sudan said his comments related to the link between trade and poverty. What was currently happening was that trade liberalization was being linked with poverty and not just trade. In addition, trade inputs were either linked to improving trade strategies and policies in totality or to improving the strategic trade of a commodity to reach a higher value market. With regard to the latter, he referred to a study that had shown that for an orange exported from Chile to New York, five per cent of the cost was for the orange while 95 per cent related to the cost of transaction services that brought that orange from Chile to the New York market. This implied that Chile was not exporting a good but rather a service. If Africa was therefore going to benefit from higher value markets then services should be the area of attention, not the commodity itself. African farmers were still locked in a low quality bracket, either from the producer side or the consumer side. In order to push the whole business forward through Aid-for-Trade inputs, the Chilean experience could be used

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as a lesson which showed how improved services had led to the success of products reaching higher value markets which in turn led to marked economic growth comparable to neighbouring Argentina or Brazil. It was imperative that Aid-for-Trade inputs to African countries, especially to sub-Saharan Africa, were channeled to specific services that could improve the trade of goods so that they reached higher value markets.

34. The representative of Uganda said that the term "supply-side constraints" had many components one of which he singled out as being inconsistencies in production which came about largely as a result of market and commodity information. Poor countries, especially the people in those countries, experienced abject poverty. Since poverty levels were very high, many of the producers – who were also labourers – would want to exploit any opportunity they could that put cash in their hands. Most of the production units in these poor countries were not commercial, especially as far as agriculture was concerned. Those production units were mostly family-based and because of the high poverty levels the family would not focus on one or two products but would try to produce anything that they thought would go into the markets. Each product therefore became a poverty reduction opportunity depending on whether the market was available or not. For most of these countries, whose environment was conducive for growing almost anything, this was one of the main hindrances with regard to the potential for agricultural development. As an example to illustrate this, he said that one year a family might want to produce pineapples and the neighbour pawpaw. Because the neighbour who was producing pawpaw had managed to sell his product to markets, the next season the other family would change from producing pineapples to producing pawpaw. There was therefore a lack of focus – primarily because the information regarding markets and commodities was not available – which resulted in fluctuation of production levels. Aid for Trade could address some of these constraints by ensuring that issues such as information, which could help stabilize developing countries' production levels, was available.

35. The representative of Sierra Leone referred to Sierra Leone's ten years of civil war which had led to a strongest or winner-takes-all approach to the art of survival. He asked what special or targeted intervention could Sierra Leone – and indeed all countries emerging from similar situations – employ to motivate themselves and to contribute meaningfully in poverty alleviation? How could these countries bring about positive change or change in attitude, which was Sierra Leone's current core request, to raise awareness that there was a linkage between Aid for Trade and poverty alleviation. It was necessary to teach countries that poverty alleviation was a process and not a one-off acquirement. Wealth acquired overnight usually led to a very dangerous situation and end, the perfect example being the recently-concluded drug trafficking trials in Sierra Leone.

36. The representative of Finland said that although the country fact sheets in the Aid-for-Trade at a Glance 2009 report showed that a tremendous amount of work had gone into elaborating them, the issue now was what to do with those fact sheets. Finland suggested that the indicators and fact sheets should be seen as a tool and an element to be used in country-level dialogues on trade and aid issues. He added that the actual value and usefulness of the indicator fact sheets would be determined on the basis of how they were used in those dialogues. However, he voiced the fear that the fact sheets might somehow have limited value added. The second point was how to move forward if Members wanted to get serious about the impact of Aid for Trade. Finland's suggestion was that not only should Members agree on the tracking of trade development but also on the refining of indicators to a more detailed level of analysis, mainly at the country level. He cautioned that continuing fine-tuning at the global level created the risk of never fixing a monitoring framework and suggested that Members should all agree to a rough framework at the global level which would result in moving monitoring to a country and regional level.

37. Commenting on the link between Aid for Trade and poverty, Mr Masimiliano Cali, ODI, said that the definition of Aid for Trade given by the Aid-for-Trade Task Force, though not explicitly linked to poverty, showed that the final outcome of any such initiative should be poverty reduction.

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However, there was also inherent tension if that outcome was taken as the direct measure of the initiative's success. This had implications both in terms of the allocation of Aid for Trade across sectors and countries and in terms of measuring the effectiveness of the initiative. When measuring Aid for Trade against poverty reduction, there was a risk of getting into a conundrum where there were so many mediated impacts that one actually lost sight of Aid For Trade. In its current work, ODI had taken a different perspective in that Aid for Trade offered the opportunity of looking at the impact on a number of certain direct measures of trade performance. Economic theory had taught that this then showed a clear link to growth and eventually to poverty reduction.

38. ODI had therefore been looking at the impact of Aid-for-Trade facilitation which was a very specific category of Aid for Trade with respect to the cost of trading. The cost of importing and exporting goods, as well as on the time of trading, were two important indicators of how countries were efficiently able to trade across borders. Some fairly significant impact over a short time frame had been seen in this regard. ODI had linked its Aid-for-Trade facilitation work with the World Bank's work on indicators which had only been available over the last few years. In the same way, some specific Aid-for-Trade interventions, such as aid for economic infrastructure, could be linked to export performance, thereby linking specific export volumes and values in certain sectors. In conclusion, she said that the link to poverty reduction was problematic and that the question was whether Aid for Trade should have a role to play in developing complimentary policies or measures which allowed increased trade and growth to translate into poverty reduction. One clear policy in that respect was fiscal policy which was the traditional policy through which enhanced growth could be redistributed across sectors. Whether Aid for Trade should play an active role or should have a focus in terms of developing complimentary measures remained an open question.

39. The Moderator said that discussions during the Session had shown that a lot of work had been done over the last two years on linking Aid for Trade and development outcomes. He highlighted the fact that this work had come from various sources and that, as a process, it would be useful to pull it all together so as to have at the next global review of Aid for Trade a stronger sense of what the studies show. He suggested that individual agencies might consider and table their own experiences which would show the emerging rich evidence of what Aid for Trade could deliver. A second theme that had been highlighted in the discussion, specifically in the context of the ODI's interventions, was that a rich assortment of indicators already existed that, to the extent possible, could be used and developed. However, the caveat introduced by Germany – that at some point the intermediary linkages for which there were not necessarily good indicators – should be recognized and reflected on. Ultimately, the link between the various interventions by both donors and recipients in terms of commitment and results would have to be made. It was therefore important to be able to indicate and understand what type of intervention gave what type of result.

40. To summarize, he said it was useful to reflect on why one was interested in monitoring and evaluation, and indicators? One of the reasons was the demand put on the system and there was a need to be able to understand better what tools best responded to those demands. The only way of doing that was by learning from practice. It was also necessary to understand where the best investments were to be made in Aid for Trade, be it through capital made available through a bank, through grants, or through the time and energy spent by both donor and recipient countries. All these were scarce resources and should not be squandered. Finally, it was necessary to demonstrate results which showed what was being obtained through Aid-for-Trade investments. He said the window was open and there was currently a great deal of interest in Aid for Trade; Members should therefore maximize this opportunity to use trade as a tool to advance development and poverty objectives.

IX. SESSION 8: AID FOR TRADE – SOUTH-SOUTH COOPERATION EXPERIENCES

1. The Moderator, Mrs. Valentine Rugwabiza, Deputy Director-General, WTO, recalled that South-South cooperation had not been a component of the First Global Review held in November

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2007. Although not a new trend in international cooperation, South-South cooperation was one of the promising future elements of the Aid-for-Trade work programme. South-South cooperation had been taking place on all economic issues for many years. China, for example, had carried out South-South cooperation for many decades; Argentina had established its Fund for Horizontal Cooperation in 1992; India's Technical and Economic Cooperation (ITEC) programme had been used to channel technical assistance to more than 150 countries; and Brazil and Chile's South-South cooperation was directed at immediate neighbouring developing countries. All four countries had responded to the OECD questionnaire on South-South cooperation and had provided valuable information which had enabled a dedicated chapter to be included in the Aid-for-Trade at a Glance 2009 report. In order to better understand and grasp the growing importance of South-South cooperation in Aid for Trade it was her intention to ask the panellists to share their experiences and the lessons they had learnt with regard to their specific South-South cooperation programmes and to provide some key messages on the way forward.

2. Ambassador Alberto Dumont, Permanent Representative, Permanent Mission of Argentina, Geneva said that South-South cooperation had been on Argentina's agenda for some 30 years arising originally from the 1978 United Nations Buenos Aires Action Plan.15 Argentina, together with other WTO members – particularly Brazil and Colombia – were firm advocates of Aid for Trade and South-South cooperation and the need for in-depth examination of these issues, particularly within the framework of cooperation through triangular systems. Argentina had submitted a document to the First Global Review reporting on technical assistance and setting out Argentina's Aid-for-Trade systems.16 It had also participated in the recent Aid-for-Trade reviews held in Lima, Peru and Montego Bay, Jamaica. Argentina was also an observer to the Standards and Trade Development Facility.

3. The Argentine Fund for Horizontal Cooperation (FO-AR) had been created in 1992 and was a two-pronged cooperation system through which Argentina provided technical assistance to developing countries while, at the same time, Argentina's own experts were provided with an opportunity to improve their technical and professional qualifications. This two-way approach meant that solutions to human and material resources problems could be found in a collaborative manner taking into account different levels of development. The FO-AR was funded through the Ministry of Foreign Relations and International Trade. Organizations such as the Organization of American States (OAS) and the International Organization for Migration (IOM) took part in FO-AR implementation activities by providing, inter alia, technical or medical assistance and funding for foreign nationals and experts to travel to Argentina for training.

4. Since 1992, the FO-AR had organized in-country seminars to address specific issues of interest to countries that had their own strategies; it had been involved in 2,600 aid projects; it had it had sent 400 Argentine experts to different countries; it had trained 500 foreign experts in Argentina; and it had worked with a range of industries from dairy production to fishing and forestry, in particular on SPS issues. All this was very relevant in the context of international standards and overcoming technical barriers to trade. FO-AR's key cooperation partners within Argentina included, inter alia, the Secretariat for Agriculture, the Ministry for Fisheries, the National Institute of Technology, the National Institute of Fishery Development, the National Drugs Agency and the Food Safety Agencies. Although the priorities for Argentine aid had focused on Latin America and the Caribbean region, its cooperation also extended to other regions such as Africa (e.g., in Angola, Tunisia, Egypt, Morocco, and South Africa), and Eastern Europe and Central Asia (e.g., in Ukraine, Albania, Armenia, Azerbaijan, and Kazakhstan). The FO-AR was also currently developing an indicator system within the framework of South-South cooperation and once the methodology for this

15 For more information on the Buenos Aires Action Plan see: http://tcdc2.undp.org/knowledge_base/bapa_english1.html

16 WT/COMTD/AFT/W/5.

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was in place Argentina would be able to engage in an exchange of ideas with other countries that had undertaken this kind of work.

5. Ambassador Dumont referred to Argentina's experience of triangular cooperation and noted that in 2001 Argentina had launched a triangular four-year project to provide expert support to Peru to help improve its animal health situation. Financial support had been provided by Japan, and the FO-AR had also worked hand in hand with the Peruvian International Trade Agency and Japanese International Development Agencies to implement the project. The project had led to the development of human resources, the setting up of laboratory and animal health resources within Peru, and the improvement of diagnostic capacities in the Peruvian animal health service and animal health centre. As a result of the programme Peru had been able to eliminate avian flu and to certify its products in line with international requirements so that it could export to other countries, particularly Japan, the ANDEAN community, and countries in Central America. Following the success of the programme, Argentina was now looking to move forward on triangular cooperation with Brazil and the International Agriculture Development Fund. It was also working with Canada, in Haiti, to develop the "Pro-Huerta" programme which aimed to improve basic agriculture capacity in Haiti, and with Spain, Italy and Portugal to implement projects in Portuguese-speaking countries in Africa. Argentina was also working on health issues in other areas of South America, the Caribbean and Africa.

6. Argentina's objective was to improve technical and productive capacity on the basis of each country's development priorities. South-South cooperation was complementary to other Aid for Trade work. Market access was important in this regard because if countries were unable to overcome technical barriers to trade and meet sanitary requirements they would not be able to make the best use of their market access. Argentina's work on triangular cooperation had had very positive results and it would welcome requests from other countries who might be interested in receiving such assistance.

7. The Moderator commented that there was obviously tremendous potential to develop the three-way triangular cooperation. Moving to Brazil, she asked Pedro Luiz Carneiro de Mendonça to provide information on Brazil's experience relating to South-South cooperation.

8. Mr. Pedro Luiz Carneiro de Mendonça, Under-Secretary for Economic and Technological Affairs, Ministry of External Relations, Brazil, recalled that the Aid-for-Trade at a Glance 2009 report had highlighted the importance of the regional dimension of Aid for Trade and said that South-South cooperation was one of the main drivers of Brazil's activities in this area. In recent years increasing trade flows among developing countries had contributed to strengthening both the demand for and the supply of South-South cooperation. Such cooperation benefited from a clear understanding of the opportunities and challenges facing other developing countries as well as from a deeper knowledge of local cultural, political and technological situations. This was at the basis of a horizontal perception conducive to a good relationship that greatly facilitated the cooperation and enhanced its effectiveness.

9. Brazil was deeply committed to South-South cooperation and was aware of its potential and impact. Brazil's South-South cooperation had focused on capacity development and an assessment had shown that partner countries were greatly benefiting from effective technology transfer developed under similar socio-economic realities. South-South cooperation enjoyed the additional advantage of being easily reproduced. The Second Regional Aid-for-Trade Review in Montego Bay, where Latin American and Caribbean Countries had had an opportunity to assess impacts of South-South cooperation, had highlighted the fact that South-South cooperation was not another form of ODA since there were no conditionalities attached to it, nor any restrictions to the possible transfer of technologies. The projects carried out within the framework of South-South cooperation were demand-driven and designed with the full participation of partners. In financial terms, this cooperation might be limited but the projects had proved to be highly effective.

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10. Turning to a concrete example of South-South cooperation, he referred to the Brazilian programme called "exports through postal services system" (Exporta Faço), launched at the end of 2000, through which thousands of SMEs in Brazil had been able to access over 200 markets abroad not previously available to them by using one of the 8,000 postal offices throughout the country. During the programme's first year almost 7,000 postal deliveries had been completed and after nine years, nearly 68,000 deliveries were registered in Brazil's data base. The programme had been replicated in Peru, and Brazil and Peru were working together to take it to Uruguay. It was hoped that in the near future other Latin American countries would also benefit from this very simple and efficient programme. Brazil was pleased to note that the Universal Postal Union intended to expand the scheme to other continents as well. Following the success of the Exporta Faço programme and its potential for facilitating trade, it had also been included as one of the priorities of the South American Regional Infrastructure Integration Initiative (IIRSA). As part of its South-South cooperation activities, Brazil also sought to strengthen developing-country negotiation knowledge and skills through the organization of courses and training workshops on trade policies and trade negotiations directed to officials from South American and African countries. One such event, organized in cooperation with UNCTAD and the WTO, had taken place in Geneva in 2005 and similar courses were now offered on an annual basis. Brazil was also elaborating a project with the Agency for International Trade Information and Cooperation (AITIC) focused on capacity building related to trade policy and trade negotiations.

11. Mr. Carneiro de Mendonça said that Brazil's South-South cooperation was not limited to Latin American countries. In Asia, for example, Brazil had established a cooperation programme with East Timor covering agriculture and education which had culminated in the creation in 2002 of a Centre for Vocational Training and Entrepreneurial Development. Brazil was increasingly involved with projects in Africa, in particular with regard to agricultural production and export capacity, and following President Lula da Silva's firm commitment to enhancing South-South cooperation, Brazil had been invited to participate in the recently-held 13th Annual Summit of the African Union. Some of the projects that Brazil had been developing with its African partners included technical assistance initiatives in Benin and Mali in the context of the Cotton Initiative which had focused on harvesting and processing of cotton. In this regard, a Memorandum of Understanding had been signed by President Lula da Silva with the African Union which would enable Brazil to replicate the cotton programme in other countries in Africa. President Lula da Silva had also reiterated Brazil's commitment to help Africa to carry out its own "Green" revolution proposing that a meeting of the African Agriculture Ministers be held in Brazil aimed at exchanging views on the steps to be taken to improve the situation of agriculture in the African continent. In 2006, EMBRAPA 17, the Brazilian Agricultural Research Company had opened an office in Accra where a team of researchers had been carrying out surveys and providing assistance to various African officials. In Angola, Brazil had established a Centre for Vocational Training and in October 2008, Veracruz had established in Mozambique its first international office. The main thrust of this initiative was to transfer the expertise that Veracruz had accumulated as a world reference centre in the field of medical research. The Agreement signed in Mozambique in 2008 also foresaw the establishment of a plant for the production of retro-virus used for HIV treatment to which the Brazilian Government had so far contributed US$7 million and the whole process of transfer of technology would take three years.

12. Brazil had a portfolio of over 50 countries in its South-South cooperation activities. Its strategy did not envisage a fast expansion of the total number of activities or partners but rather sought to invest via a programme approach on projects which had large potential and a powerful impact on the participation of developing partners in world trade. In this context, triangular cooperation had an important role to play in view of its capacity to mobilize a greater amount of technical and financial resources from all partners involved. Brazil had up to now also approved triangular projects with at least 10 traditional donor countries and another 10 multilateral

17 Empresa Brasileira de Pesquisa Agropecuária.

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organizations. It was open to triangular partnerships with international organizations as long as the same principles which guided Brazil's South-South cooperation were followed: alignment, ownership, and equality. Based on its recent experience, Brazil was nevertheless aware of the challenges that needed to be addressed in cases of triangular cooperation and he referred to a recent meeting held in Brasilia, jointly organized by the Brazilian Cooperation Agency, the European Union and the German International Cooperation Agency, which had allowed for a useful exchange of views on the difficulties relating to triangular cooperation. Some challenges that had been highlighted included, for example, how to promote a clear division of responsibilities among the partners and how to mobilize both technical and financial resources from the partners in a fair manner.

13. Concluding on a positive but cautious note, he said that although the Aid-for-Trade at a Glance 2009 publication had reported that donors had met or were on the way to meeting their 2005 Hong Kong pledges and that they were also committed to increase ODA levels in the short term, it should not be forgotten that the current economic crisis had also increased the assistance needs of developing countries. Future work on Aid for Trade therefore needed to focus on identifying best practice and on improving the efficiency of cooperation programmes, bearing in mind the reality that resources would probably decline. Brazil was of the view that promoting South-South cooperation could be a means to address developing countries' supply-side constraints in a cost-efficient manner. As a result, ways should be sought to improve South-South cooperation by ensuring that commitments were made without the adoption of trade-distorting measures in response to the crisis, and making sure that the Doha Round was concluded in a development-oriented way.

14. Mr. Marcelo García Silva, Head, OECD Department, Directorate-General for International Economic Affairs, Chile, provided an overview of Chile's experience in South-South cooperation. He noted that its success was due to three main elements. First, Chile had been pursuing a very open trade policy from a regional perspective, focusing on Latin America where it had tried to strike a balance among the different export sectors. Second, Chile had set up mechanisms and institutions abroad that enabled it to export effectively and develop cooperation capacities. Third, Chile had developed the necessary legal structure, including programmes and cooperation agreements, which enabled it to take these initiatives. South-South cooperation was not new to Chile. It had been engaged in the voluntary provision of assistance, training, triangular cooperation, seminars and traineeships for many years. These actions helped support other countries to develop sustainable capacity to improve exports – key objective of development aid. In this context, Chile had been actively involved in developing market access.

15. With regard to its geographical development strategy, Chile first focused on its neighbour, Bolivia, where it had a strong commitment to asymmetric and immediate openness to facilitate Bolivian exports to Chile's markets. Its strategy then extended to countries in Central America and the Caribbean, to countries where it had strategic interest, and to countries in Africa. Referring to working from South-South cooperation towards Aid for Trade, he listed four main reasons for moving in this direction: (i) international cooperation had changed; (ii) greater harmonization and effectiveness were needed; (iii) as pointed out in the Paris Declaration, the process needed to be more demand-driven; and (iv) the current global economic crisis. LDCs needed to be encouraged to develop their export capacities and integrate into international trade. The good practices developed by Chile through South-South cooperation in Latin America was a useful way to achieve that goal.

16. As for the prospects of South-South cooperation, he said that Members needed to continue to work towards trade agreements that, inter alia, opened up markets, facilitated foreign direct investment, and linked countries better into the international supply chain. While Chile provided South-South or triangular cooperation, at the same time it needed to meet its own structural needs; Chile's cooperation was therefore provided on the understanding that Chile could also meet its own strategic objectives. There were also a number of challenges to overcome in connection with development cooperation. These included raising awareness, ensuring a greater regional balance in

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the distribution of Aid for Trade, improving communication, involving the private sector, achieving a better coordination of aid, and ensuring that Aid for Trade was additional and complementary to other forms of aid. Finally, he said that monitoring and evaluation – including peer assessments – were important if Aid for Trade was to be improved.

17. The Moderator then turned the focus of the discussion to Asia and invited Ms. Chai Xiaolin to provide information on China's experience in South-South cooperation.

18. Ms. Chai Xiaolin Deputy Director General, Department of International Trade and Economic Affairs, Ministry of Commerce, China , said that South-South cooperation was not a new phenomenon in China's international cooperation and had been a state policy for some time. For over half-a-century China had been providing assistance to other developing countries under a South-South cooperation framework. Trade-related activities (i.e. Aid for Trade) had long been an integral part of China's overarching foreign aid because China believed that promotion of trade was not an end in itself but rather a way to meet a broader goal for partner countries' long-term economic growth and sustainable development. Since 2000 China had implemented more than 300 projects, exempted 374 interest-free loans that had come to maturity for 49 countries, and had entered into debt relief arrangements for LDCs whose debts will have come to term by the end of 2008. In 2007 and 2008, China's Aid for Trade increased by 20 per cent and 30 per cent, respectively, compared with the 2002-2005 period.

19. Ms. Xiaolin provided concrete examples of assistance that fell into the categories of Aid for Trade. In the area of trade-related policy development, in 2007 China had helped design a Trade Development Plan for the Northern provinces in Laos which had contributed to the macro policy-making process of both central and local government. With regard to trade-related infrastructure building, China had built the Laos section of the highway from Kunming to Bangkok, a power station in Myanmar, and the Cambodian section of the GMS Information Highway. All these projects had greatly enhanced the transportation, power supply and communication capacity of the partner countries involved.

20. China participated actively in the implementation of the Almaty Plan of Action for the landlocked and transit countries promoting trade facilitation, regional economic development and alleviation of poverty. With respect to trade capacity, China had helped build a sugar factory in Mali, the Wanrong cement factory in Lao PDR, the Agricultural Technology Centre in the Philippines, and a fishery products' processing centre in Vanuatu. These projects had contributed to the respective countries' export diversification and enhanced international competitiveness in the global market. In the area of technical assistance, China had trained 6,815 trade and economic professionals since 2000 to share knowledge and transfer practical and management skills. China had shared its experience with WTO accession and implementation of commitments with Laos, Viet Nam and other countries.

21. China promoted South-South trade through Free Trade Agreements (FTAs) such as the ASEAN 10+1 FTA, FTAs between China and Pakistan, between China and Chile, and between China and Peru. As a result, there had been a marked increase in trade volume among members.

22. On trade financing, China had established well functioning mechanisms and had acquired some experience in this domain. In the midst of the current financial crisis, China had actively participated in the Global Trade Liquidity Pool and had also made pledges to regional banks in Africa, Asia and Latin America. Through the Sino-US cooperation framework, the China Export-Import Bank had made available US$20 million for trade financing. The Sino-African Cooperation Forum launched in 2000 was another concrete example of South-South cooperation, putting trade in a much broader agenda for development. The current plan of action due to be completed by the end of 2009, included doubling the 2006 volume of aid, provision of concessional loans of US$3 billion and concessional export credit of US$2 billion, debt relief and duty-free and quota-free market access to

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products from LDCs covering 97 per cent of their products, as well as establishment of three to five economic and trade zones in the African Continent.

23. Turning to best practices and lessons learned, China believed that the following factors lay very much at the heart of effective aid: country ownership with mutual respect; time-bound delivery with tangible results; satisfaction rating as a primary indicator to measure the impact of aid; and software and hardware support.

24. On the way forward, China's own experience and the Second Global Review itself had shown that good results had been achieved. The growing importance of South-South cooperation and Aid for Trade was therefore self-evident. Nonetheless, there were still gaps that warranted continued effort and, given the current economic crisis and the need for sustained growth and development, focus should be put on both short-term interventions and strategies that would bring long-term benefit to partner countries. Fighting against protectionism, maintaining open markets, increasing trade financing and mainstreaming trade in national economic plans were key to sustained economic development to continue addressing supply-side constraints through capacity building and supporting trade-related infrastructure.

25. In conclusion, she noted that the Doha negotiations were entering their end game after eight years of painstaking effort. A successful conclusion of the Round would serve as the most effective stimulus for the world community, boost the demand for goods and services, meet development goals and rebuild the world's confidence in the multilateral trading system. China would therefore like to call on all to follow the mandate, build on the achievements made so far and resolve remaining issues, and to conclude the Round in 2010.

26. The Moderator then asked Ambassador Ujal Singh Bhatia to explain the work that India was doing in the area of South-South cooperation.

27. Mr. Ujal Singh Bhatia, Ambassador, Permanent Representative to the WTO, Permanent Mission of India to the WTO, Geneva, said that South-South cooperation had accelerated over the last few decades with the emergence of a number of developing economies as major players in the world trading system. This was a significant and valuable complement to the Aid for Trade provided by traditional OECD member-country donors and multilateral funding agencies. Advantages of South-South cooperation included the fact that much of it took place in the immediate neighbourhood enabling a better appreciation of the challenges, requirements, constraints and local specificities, and that it was less sensitive to external factors, such as the current global recession.

28. While India had been a provider of development assistance since its independence in 1947, this had gained added momentum over the last decade as a result of the accelerated growth of India's economy. India saw South-South cooperation more in terms of a "partnership" rather than a "donor-recipient relationship". While India could not offer grants in aid to match those of developed country donors, what it could offer was over six decades of development experience, and manpower skills and technology that were more appropriate to the geographical and ecological conditions of most developing countries. In India's view, this type of assistance was more cost effective.

29. South-South cooperation had traditionally been an important pillar of India's foreign policy and its activities were directly in line with the WTO Director-General's call that "countries need infrastructure, enhanced production capacity and trade-related training which is essential if trade is to be streamlined into development and poverty reduction strategies in the developing world". The Indian Technical and Economic Cooperation (ITEC) programme, established in 1964, was the flagship instrument for channeling India's technical assistance to around 158 partner countries and since that time India had provided over US$2 billion worth of technical assistance to developing countries. Included in the ITEC programme were (i) technical training programmes for capacity

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building which focused, inter alia, on organizational entrepreneurship, business development for SMEs and micro enterprises, industrial and infrastructure project preparation and appraisal, business research methods, Intellectual Property Rights and implications for SMEs, cotton cultivation in the "Cotton 4" countries (Burkina Faso, Chad, Benin, and Mali); (ii) projects and project-related activities such as feasibility studies and consultancy services; and (iii) deputation of Indian exports. Under ITEC and other similar schemes, every year around 5,000 participants (of which some 1,500 were from Africa and 500 from Afghanistan) attended 200 courses in 43 select institutions, which were centres of excellence in their respective fields.

30. Ambassador Bhatia gave examples of the assistance provided by India in relation to infrastructure projects. In Afghanistan, where India's current level of assistance amounted to over US$1.3 billion – making it the sixth largest bilateral donor to that country – India had funded the construction of a road from Zaranj to Delaram in Southern Afghanistan and the construction of a 220 KV Transmission Line from Pul-e-Khumri to Kabul. In Nepal, over 310 small and large projects were currently being undertaken under the India-Nepal Economic Cooperation Programme. Some larger infrastructure projects in Nepal included integrated check posts at four border check points, over 1,500 km of feeder and lateral roads in the Terai, the Mahendranager-Tanakpur link road in Western Nepal, and cross-border rail links at five border locations. In Bhutan, India was establishing several hydro power projects, highway projects and a cement plant near Nangalam and had also been involved in other large projects such as the construction of Paro Airport, the Bhutan broadcasting station, the electricity distribution system for Thimphu and Paro, and the Deothang-Rangia power transmission line. In Myanmar, India had assisted in the India-Myanmar "friendship" road as well as the upgrading of infrastructure at Sittwe Port. Africa, too, where India's assistance programme was channelled through New Partnership for Africa's Development, Pan-Africa E-Network Project and Team-9 initiative, had also been the beneficiary of several information technology and other infrastructure projects. Over the next five years, India proposed to undertake projects in excess of US$500 million in grants.

31. India also extended concessional lines of credit. The EXIM Bank of India, for example, currently had 117 operative lines of credit amounting to US$3.85 billion in 94 developing countries, including from Africa, Latin America, Asia and the Commonwealth of Independent States (CIS). Between 2003-2004 and 2008-2009, India had extended lines of credit amounting to US$2.15 billion to Africa and had decided to offer additional lines of credit over the next five years amounting to US5.4 billion, both bilaterally and to the regional economic communities of Africa.

32. India's bilateral South-South cooperation efforts were complemented by its regional cooperation, notably within the South Asian Association for Regional Cooperation/South Asian Free Trade Area framework, India-Brazil-South Africa Dialogue Forum Trilateral development forum and India's proactive engagement in various regional and multilateral cooperation groupings and fora.

33. As far as the annual quantum of assistance was concerned, for the financial year April 2007-March 2008 the volume of aid and loans extended by India had been approximately US375 million, the largest recipients being Bhutan (US$162 million), Afghanistan (US$96 million), Nepal (US$ 22 million), and Bangladesh (US$13 million), which were all LDCs.

34. Ambassador Bhatia then responded specifically to the three key questions that had been addressed to the Session panellists. First, what lessons could be learnt from Aid for Trade offered by South-South partners? He said that, for India, the most important lesson was that programmes should be responsive to partner countries' needs. The ITEC programme, for example, was structured to be demand-driven or response-oriented with considerable importance being attached to the feedback received from stakeholders, i.e. participants attending training courses in India, the concerned institutions, Indian Missions abroad, ITEC alumni groups, etc. This was the same bottom-up and demand-driven approach that India also followed for infrastructure projects. The feedback received

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and the close consultation with partners had helped in making improvements and fine-tuning various aspects of India's assistance to suit the requirements of partners.

35. Second, how could existing traditional donors and regional development institutions support further South-South cooperation, notably at regional level, through Aid-for-Trade activities? He said that traditional donors and regional development institutions could support South-South cooperation by way of innovative measures for technical cooperation or assistance such as triangular cooperation arrangements under which, for example, Indian institutions provided training to candidates from developing countries with funding being made available by the traditional donors or institutions. This strategy sought to leverage India's state-of-the-art institutions, that were equipped with technical prowess and human resource capabilities at competitive prices, to provide technical assistance to developing countries by way of net additionality over-and-above what was being provided by India on a bilateral basis.

36. Third, how could other South-South partners be encouraged to mainstream Aid for Trade into their development strategies? He said that India did not wish to provide any prescriptive or one-size-fits-all suggestions of South-South cooperation activities and that each country should be free to undertake its own activities with regard to South-South cooperation in consultation with its partners in a demand-driven process. India, for example, responded to specific requests from partners and had conducted special courses for developing countries at various stages of accession to the WTO, the most recent of which had been held for CIS countries, Lao PDR, and Yemen.

37. The Moderator thanked the panellists for their presentations which she said had provided a great deal of very substantial information on what was being done with regard to South-South cooperation in different regions of the world. It was clear that this cooperation could take many varied forms and involve various sectors including trade facilitation, technical assistance, infrastructure, and financing for trade. A comparative advantage of South-South cooperation – which was not new – could be seen from the examples provided by the five countries. The potential for the development of triangular cooperation had also been well-illustrated and in her view it was now time to take stock of South-South cooperation in terms of the challenges involved, its impact, and its effectiveness. The outcome and assessment of the Argentinean project in Peru on sanitary and phytosanitary standards were clear; on the other hand, assessment of the impact and institutional capacity of Peru was something which could be further explored. She then opened the floor for comments.

38. The representative of the Netherlands asked whether or not developing countries providing aid to other developing countries participated in donor coordination mechanisms in their respective countries?

39. The representative of Zambia said the North-South Corridor project in Africa was a practical example of Aid-for-Trade cooperation and that, in the context of that project, as well as at a country level, China was providing valuable South-South assistance to Zambia by, for example, committing to support the rehabilitation of part of the railway line between Zambia and Tanzania and construction of economic zones as a mechanism to diversify the economy. As a final point, he underlined the fact that South-South cooperation was critically important for growth and job creation.

40. The Director-General of the Universal Postal Union (UPU ) noted that it was participating in the efforts to develop trade and to make best use of the opportunities made available by international trade. He then referred to the successful work of the Brazilian postal service and its Exporta Fácil programme for SMEs through which 10,000 SMEs in Brazil were able, for the first time, to have access to international markets. With assistance from Brazil, the World Bank and the IaDB, other countries in Latin America were replicating the Brazilian experience and, after a careful analysis of the outcomes of the export programme in terms of SMEs' ability to access new export markets, the

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UPU itself had decided to repeat this experience in other parts of the world. With this in mind, he said that UPU would soon be launching pilot projects in Asia, Thailand and Laos. For these projects, UPU would need to bring together all partners including postal operators, governments, regional organizations, customs, donors and, of course, the WTO – in other words a South-South approach, based on successful regional level experiences and roles supported by technological solutions developed by UPU. UPU hoped that this modest but concrete contribution to Aid for Trade, particularly in the area of South-South cooperation, would have immediate tangible effects in terms of the development of SMEs and their capacity to export by giving them access to industrialized country markets. The current economic crisis had clearly shown that SMEs were very much the drivers of the economy and the aid offered by UPU and the postal sector in the area of trade, exports and E-commerce development should therefore be supported and developed. He hoped that within the framework of the Aid-for-Trade initiative the necessary support and partnerships, particularly at regional level, could be found to extend the Brazilian success story elsewhere.

41. The representative of Japan asked whether developing countries providing aid to other developing countries were sharing information on their success stories with OECD Development Assistance Committee and other such fora.

42. The Moderator invited the panellists to respond to the questions that had been asked.

43. In response to the questions from Japan and the Netherlands regarding coordination among donors and information sharing, Mr. García said that in Chile there was good coordination with donors, particularly in the case of triangular cooperation which opened up the possibility of agreements with the European Union where there were also good possibilities for improved coordination. Although South-South cooperation was one of the key thrusts in Chile's Foreign Trade Policy and was a cross-cutting theme for Chile in terms of foreign aid, there was a need for specific Aid for Trade to be recognized. Chile did not have a specific Aid-for-Trade strategy but the conceptual difference between South-South cooperation – which was fairly broad, for example, in terms of technical assistance and awareness raising – and Aid for Trade, which was specifically aimed at improving export, needed to be underlined. With regard to exchange of information, one of the problems with South-South cooperation – and Aid for Trade in particular – was that a better exchange of information was needed. To achieve this, the information provided by donors and beneficiaries needed to be checked and a better effort to communicate the results of Aid-for-Trade studies and reports made so that all information could circulate more effectively.

44. In reply to the question on donor coordination, Ambassador Dumont said that Argentina's situation was similar to Chile's in that it had a number of bilateral agreements and there were no specific problems in terms of coordination with donors. Argentina did not have a single window for Aid for Trade and looked at South-South cooperation in very general terms as a framework for dealing with cross-cutting issues such as, for example, human rights, trade facilitation and assistance for customs. He said that perhaps what was needed was a more specific approach to Aid for Trade so that Argentina's expert knowledge on issues such as SPS, TBT, and customs issues could be offered in a more effective way. On information exchange, this was something he felt could be analysed. He referred to the possibility of carrying out impact assessment studies on the basis of common indicators, as mentioned by WTO Deputy Director-General, and said that Argentina was currently working on the issue of both qualitative and quantitative indicators. Once it had developed an indicator template, Argentina would share this with the beneficiary countries to see whether the indicators were effective and precise enough to form the basis of, at least initially, a regional assessment mechanism – which could then perhaps be extended – so as to improve the way in which Aid for Trade and subsequent financing was assessed.

45. Ambassador Bhatia said that the projects that India operated had to be demand-driven. There was no formal horizontal process of consultation per se, but once a request for a particular initiative

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had been received, India would carry out a pre-project evaluation and would contact other donors to see what kind of programmes were already being implemented. On the issue of mainstreaming Aid for Trade, he said that if the idea was to have an a priori allocation of Aid-for-Trade funding within the overall South-South cooperation funding provided, that was not the way India structured its activities. India's activities were based on recipient countries' demand, needs and preferences; if Aid for Trade was what they wanted, then Aid for Trade was what India would provide. India was in a position to provide effective assistance in a number of trade-related areas, including trade facilitation, technology, business skills for SMEs, etc., but the assistance given depended on the priorities of the recipient countries.

46. Ms. Xiaolin said that, with regard to donor coordination, China did not consider itself a traditional donor and its South-South cooperation provided to other developing countries was more a partnership which had already been in existence for a number of years. Trade-related activities had long been an integral part of China's overarching foreign aid programmes because China believed that promotion of trade was not an end in itself but a way to meet a broader goal for the partner countries. For China, effective coordination meant consultation between the donor and partner countries themselves so as to achieve country ownership and a demand-driven process. Regarding the OECD/DAC information sharing process, she said that although China fully supported the transparency of aid programmes, as proposed by the monitoring and evaluation system of the DAC Committee, China wanted to make sure that it did not add too much administrative cost. In the absence of a clear definition of Aid for Trade and whether Aid-for-Trade initiatives should be mainstreamed into broader assistance programmes – which was still under discussion – she said that copies of some brochures providing information on China's foreign aid programmes had been made available to participants. As a final word, she said that China would like to continue its collaboration with African countries in the years to come.

47. In reply to the question concerning donor coordination, Mr. Carneiro de Mendonça said that Brazil had no problem with coordination as long as the conditions set by Brazil were met. He added that Brazil's international cooperation was different in that Brazil looked at it as a partnership exercise and not an end in itself. Unlike traditional donor cooperation which tended to lean towards, for example, an occasional business scheme to sell goods and services, Brazil's South-South cooperation aimed to assist countries which, like Brazil, were striving for development.

48. The Moderator said that the exchange of experiences from different countries on their South-South cooperation programmes had been very encouraging. Summing-up the discussion, she said that three messages had emerged. First, it was clear that in the context of the current economic crisis the needs of developing countries had increased and that more input was needed from partners in the area of Aid for Trade. South-South cooperation was an increased and welcome development in this regard. Second, coordination of all stakeholders at the country and regional level – including among donors and among South-South partners – clearly had a number of benefits, including with regard to the reduction of transaction costs which was particularly pertinent in light of the current crisis. And, third, the monitoring, collection of information, and evaluation of Aid for Trade programmes was important.

X. SESSION 9: AID FOR TRADE – WAY FORWARD

1. The Chairman, Ambassador   Servansing, Permanent Mission of Mauritius to the WTO and Chairman of the Committee on Trade and Development, stated that the Second Global Review had surpassed expectations and had generated lively debate. Discussions had covered global flows, regional and national aid flows and the role of partner countries in establishing priorities when using such aid as an additional tool for their economic development. There had been lengthy discussion of the negative effects that the current financial crisis might have on future Aid-for-Trade flows and the fact that donors and partners should become more efficient in how they disperse and how they use

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such aid; the global downturn demanded that everyone became better at using limited resources. Good examples of Aid for Trade at work had been referenced which showed how it could be done and also how it could be done better. The impact Aid-for-Trade on trade performance and how the effectiveness of Aid-for-Trade could be improved had been discussed and how these improvements could be measured by employing the right mix of indicators. And, finally, the growing role that South-South cooperation played in Aid for Trade had been examined, as had the need for more involvement and engagement from the private sector. It was evident that the Second Global Review had shown what progress had been made since the last review in 2007. The Chairman opened the floor to delegations to comment.

2. The representative of Barbados, on behalf of the Group of Small, Vulnerable Economies (SVEs), expressed appreciation for the contributions of the presenters and panellists. The SVEs also wished to acknowledge and commend the Director-General on the activist role that he continued to play in the Aid-for-Trade discussions and to recognize the important work done by the OECD and the regional development banks. He said that although the WTO's Aid-for-Trade agenda pre-dated the current financial and economic crisis, it had now emerged as one of the indispensable instruments through which the WTO would deliver on the development agenda, particularly as it related to SVEs. This was even more important given that the full implications of the financial crisis on countries' economies had not yet been felt. Implications for SVEs, for example, included difficulty in accessing trade finance, fallen export volumes and receipts, decreased remittances and tourism, increased unemployment and social dislocation and diminished demand for products and services. As a result, SVEs would require certainty and predictability in aid flows in the years to come and Aid for Trade was a crucial component of the development strategy of SVEs. As a member of the Aid-for-Trade Task Force, Barbados had been designated to represent the interests of SVEs. On behalf of the SVEs, a substantive document had been tabled that set out the characteristics and systemic vulnerabilities of SVEs and that made a very strong and evidence-based case for the importance of Aid for Trade to those economies.18 The need for flexibilities to be conferred on SVEs was widely accepted and had been reflected in many areas of negotiations under the DDA. However, if such flexibilities were to be truly effective and pro-development in focus and impact, they needed to be complemented with commitments to provide SVEs with a share of Aid-for-Trade resources that would support the implementation of the DDA.

3. A number of studies undertaken by various international organizations and think-tanks had clearly illustrated that SVEs required sustained and focused Aid for Trade to supplement their efforts to increase productive capacity and diversify exports. Infrastructure and trade facilitation assistance was critical so that the small island, coastal and landlocked developing members of SVEs could effectively confront the distance between their respective markets and the main trading centres, continue development of skills base and social capital, direct budget support and adjustment assistance, and help to further develop value added industries and strengthen agriculture, SPS, TBT and the intellectual property architecture. It was also clear that SVEs would require assistance to confront the challenges of climate change.

4. As was apparent from the two days of discussions, key to moving forward on the Aid-for-Trade initiative was the need to work collectively and to collaborate on ensuring the effectiveness of aid. The key elements envisaged in the Paris Declaration and the Accra Agenda for Action should thus be complied with and, in so doing, development partners must ensure long-term planning of aid disbursements, an increase in the harmonization of aid, greater ease in accessing aid and urgently enhance the delivery of aid to developing countries. The SVEs, as developing-country partners, therefore had the responsibility to continue to fully integrate trade in their national development strategies.

18 WT/AFT/W/18.

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5. The SVEs had also taken note of the discussion on indicators and of the ongoing important work on this critical issue that was being done under the auspices of the Committee on Trade and Development. Also welcome, were the improvements that had been made to the Enhanced Integrated Framework. Although not members of the EIF, SVEs took a great interest in the diagnostic tool and action matrix that had been established within the EIF and believed they were interesting tools that could assist in determining specific needs of SVEs and the types of interventions required to address those needs. In the context of moving forward on the Aid-for-Trade monitoring framework, Barbados proposed that the SVEs would be an important thematic focus for evaluating the impact of Aid for Trade and looked forward to continuing dialogue with the WTO on how this could be implemented in the future.

6. Turning to the provision of aid for infrastructure, he said that studies had shown that in SVEs this could have a multiplier effect on the efficiency and effectiveness of their economies. The same was also true as regards aid for building productive capacity, especially in certain key sectors such as tourism, textiles and apparel. He highlighted the fact that the projects that were being implemented in SVE regions demonstrated the positive impact and externalities of trade facilitation procedures – especially regional trade facilitation initiatives – and showed how important these trade, transport and energy corridors could be for national and regional economies. The SVEs looked forward to learning from each other and to developing a compilation of ideas and best practices to allow for the implementation of these kinds of programmes. SVEs had taken note of the focus on the regional dimension for determining needs and delivering assistance and had confirmed that initiatives to support and strengthen regional integration were indispensable. The need for financial assistance and capacity building to be focused on regional mechanisms and regional organizations to allow them to effectively support the member states was a critical element that must be explored beyond the Global Review. SVEs were also of the view that channeling aid to the competent regional financial institutions for disbursement to national entities was an archetype that international development partners might wish to explore further. It would be important to work with development partners so as to create an effective machinery for accessing and delivering the funds in a manner that was simple, transparent and predictable.

7. Also noted was the view that there needed to be an improvement in the involvement of the private sector and civil society in the determination of aid priorities and as major components of any monitoring and evaluation scheme. SVEs would give importance to further examining ways to effectively enhance private sector involvement at the national, regional and global stage in the Aid-for-Trade debate. In this respect, SVEs had taken note of the future focus on private foundations as providers and partners of Aid for Trade. This was an area that SVEs were, in principal, interested in pursuing and note had been taken that some regional organizations – such as the IaDB – had already developed a "donor index", which would provide a useful tool for engaging with these philanthropic organizations. SVEs were of the view that this was a best practice that could be shared.

8. SVEs also welcomed the move towards increased South-South and triangular cooperation and reaffirmed that within the SVEs Group there was much that could be learnt from each other. Mechanisms should be established at the regional and global level to facilitate this form of sharing of best practices.

9. In conclusion, the SVEs reinforced that Aid for Trade was a complement to the development outcome of the Doha Development Agenda and that its full implementation was not contingent on a completion of the Doha Round. However, it was clear that Aid for Trade was a key policy instrument for many developing countries, especially SVEs, to assist in the implementation of outcomes of the Doha Round and previous rounds of trade negotiations, as well as new economic and financial challenges. Raising the profile of Aid for Trade and bringing the trade and aid communities together under the umbrella of the WTO was, in itself, a success, but there was much more substantive work to accomplish. In the tumultuous times ahead the key words of additionality, effectiveness and

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predictability were paramount and must guide future tasks. SVEs looked forward to the day when there would be no need for any subject area called Aid for Trade but, until then, translating the ideas behind the concept into tangible results which would benefit SVEs should be ensured.

10. The representative of Guyana, on behalf of CARICOM, said that CARICOM countries were small, highly indebted, preference-dependent economies and their efforts to use trade to spur development had been severely handicapped by the current global economic downturn. All Caribbean economies had experienced marked decreases in their earnings from the export of goods and services and from remittances. This had forced them to look for new, fresh and innovative approaches to deal with the daunting challenges which were well documented and included a high debt to GDP ratio, supply-side constraints, limited productive capacity, inadequate economic and trade-related infrastructure and falling commodity prices. In this respect, CARICOM wished to express its appreciation to its development partners for support in their efforts to meet such challenges. He emphasized that these challenges were far more than just trade-related and prompted the need for strategic policy interventions in key areas such as education, security and safety, macroeconomic stability and shoring up economic infrastructure. The concept of Aid for Trade was predicated on the understanding that improved market access opportunities did not automatically translate into exporters penetrating global markets. The Aid-for-Trade initiative was therefore seen as a vital and promising tool to help CARICOM countries to meet their development objectives.

11. He noted that, in 2006 for example, 57 per cent of CARICOM exports to the EU stemmed from just five commodities. That export path was unsustainable because of heavy preference erosion, as witnessed by the changes in the EU import regimes in sugar, bananas and rum. It was for that reason that, as members of the ACP Group, the Caribbean had fought for preference erosion treatment on selected export items in both NAMA and Agriculture. Tangible proposals from development partners as to how they would deliver on these commitments were still awaited.

12. Aggregate Aid-for-Trade flows to the Caribbean had reached U$289 million between 2002 and 2005 with a 10 per cent gain by 2007 to U$317 million. In 2007, the Caribbean had received 60 per cent more in Aid-for-Trade funds for productive capacity projects. In light of a 2008 World Bank study on Aid-for-Trade indicators that had shown that some of the highest levels of potential demand for Aid for Trade were generated in countries from the CARICOM region, these flows fell well below the level required if Aid for Trade was to have a meaningful role in stimulating exports and in contributing to the development objectives of Caribbean countries.

13. The Second Global Review provided an opportunity to make a comprehensive analysis of the engagement of development partners and their partner countries, and to highlight the extent to which Aid-for-Trade commitments were being fulfilled and effectively utilized in both the bilateral and regional contexts. Full attention must be given to issues of predictability, additionality and country-ownership and to examining how these commitments could be maintained and enhanced in the present context of economic crisis and liquidity contraction. In addition to evaluating the progress made since the 2007 Global Review, the CARICOM countries believed that the following issues had to be addressed: sustainable economic development especially where gains made by countries such as those in CARICOM might have effectively been reversed by the global economic crisis; the need for clear commitment from development partners on the likely and best flow of Aid-for-Trade funds based on each aid-receiving country; and the need to build on the momentum created by the regional consultations that had already taken place and the solid research on Aid for Trade which had been done in order to better able to work towards matching funds against project proposals. With respect to the latter, CARICOM welcomed the data and analysis provided by both the OECD and the WTO Secretariat.

14. Referring to the recently-held Regional Conference on Aid for Trade held in Montego Bay, Jamaica, he said that discussions had revealed that many countries were concerned that international

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development partners had broadly considered the funds provided in support of social programmes, national budgets and general economic development initiatives as Aid for Trade. Recipient countries, particularly those in the Caribbean, had been requesting specific attention to those issues affecting trade development, for export diversification and trade-related infrastructure. As regards CARICOM's priorities, in their responses to the OECD-WTO Aid-for-Trade questionnaire, CARICOM member states had identified the following five critical areas: (i) competitiveness and private sector development; (ii) trade policy analysis, implementation and facilitation; (iii) regional integration and cooperation; (iv) network infrastructure; and (v) adjustment and revenue implications arising from the implementation of trade agreements. Taking account of the importance of Aid for Trade, the CARICOM region had developed a roadmap defining its regional integration and cooperation processes, requirements for effective participation in the multilateral trading system and the related human resource requirements. In a number of disciplines CARICOM had developed a slate of specific needs and costed the interventions, thereby allowing to effectively engage with its development partners.

15. With regard to the way forward on the Aid-for-Trade initiative, he proposed the following strategies: (i) build on progress made so far; (ii) continue evaluation of the impact and effectiveness of Aid for Trade; (iii) increase support to regional integration processes; (iv) delivery of Aid for Trade through the use of regional financial intermediaries and other mutually agreed facilities; (v) greater participation in the design of Aid-for-Trade interventions; (vi) pursue additionality to bring pressure to bear on international development partners to honour their commitments to the AfT initiative; (vii) seek better ways to increase the participation of the private sector and planning agencies or those agencies involved in coordinating development assistance; (viii) stronger focus of development partners on capacity development of both public and private sector institutions; (ix) access of Aid-for-Trade funds, preferably in grant form, bearing in mind that seven out of ten of the highest indebted countries on a per capita basis were in the CARICOM region; (x) predictability and consistency of Aid for Trade in accordance with the Paris Declaration on Aid Effectiveness; and (xi) delivery of Aid for Trade, preferably in the form of budget support at the national level. He concluded by saying that CARICOM countries were defined as middle- and high-income developing countries and that it was highly probable that, on the basis of that definition, those countries would be excluded from access to Aid-for-Trade resources. The global community must pay greater attention to the distinctive features of CARICOM countries.

16. The representative of Zimbabwe, on behalf of the ACP Group, said that the ACP Group recognized the importance of the review process of Aid for Trade to enhance transparency and increase effectiveness in managing aid. The ACP Group remained committed to playing an active role in shaping the Aid-for-Trade debate as well as in identifying, designing and implementing Aid- for-Trade measures and making Aid for Trade work.

17. In preparation for the Second Global Review of Aid for Trade, the ACP Group had held a two-day meeting in Geneva for senior officials from ACP member states to share their priorities and experiences – both national and regional – and develop recommendations for the review process and the way forward. The ACP Group recognized the key role international development partners played not only in providing Aid for Trade but also in enhancing aid effectiveness. The ACP Group urged international development partners to: (i) secure the sufficiency and additionality of Aid for Trade to ACP countries, particularly the SVEs and LDCs, and to also mitigate the negative impacts of the global economic crisis; (ii) ensure that trade adjustment programmes were fully and adequately funded for the entire reform cycle with sufficient front-loading to cover the immediate costs of liberalization; (iii) proactively address Aid-for-Trade needs arising from changing trading environments, not least in the context of preference erosion, including the need for measures to facilitate diversification; (iv) assist developing countries in their efforts to identify needs and design interventions; (v) ensure that funding was available to support both regional integration processes and national development priorities; and (vi) ensure that monitoring and evaluation mechanisms of Aid

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for Trade measured the impact of Aid-for-Trade interventions and ensured that lessons learned were incorporated into new initiatives.

18. As developing countries, the ACP Group carried its share of responsibilities and recognized the need for ACP regions and member states to play a very active role in the identification, design and delivery of Aid-for-Trade measures. The Group was called on to contribute to the design of Aid-for-Trade interventions, monitoring (including through the effective use of existing tools such as the OECD database), the creation and operation of national and regional institutional mechanisms, and the systematic and effective inclusion of private sector operators. Although some ACP Group members had already taken on these responsibilities, for example through important reforms at national level, firm assurances were yet to be obtained from development partners that they would respond favorably and in a timely manner. In many cases, the response had not been as forthcoming as might have been useful and for the Aid-for-Trade initiative to be credible this was one aspect that should be addressed.

19. The ACP Group agreed that Aid for Trade was an important vehicle through which to support developing and least-developed countries to benefit from trade opportunities. ACP countries were acutely aware of the links between Aid for Trade and bilateral, regional and multilateral negotiations on trade disciplines, including the DDA. That said, it was clear that effective progress on Aid for Trade was certainly an essential condition, but not a substitute, for the successful conclusion of the Doha Round.

20. The representative of Zambia, on behalf of the LDC Group, said that the Second Global Review of Aid for Trade was timely, particularly in the context of the current global financial and economic crisis, which had had adverse effects on LDCs. The Second Review meeting was being held against a very different backdrop than the buoyant global economy that had accompanied the First Global Review in November 2007. Least-Developed Countries attached great importance to Aid for Trade considering it to be an effective vehicle for the meaningful integration of their economies into the multilateral trading system. At the beginning of the Doha Round, it had become increasingly clear that for developing countries – and particularly LDCs – to integrate into the global trading system, more was needed beyond better access to markets in the form of duty-free and quota-free market access and preferential trade rules. A necessary complement was aid that would contribute to LDCs being able to defend their interests in international trade negotiations and enterprises being able to enhance their supply capacities and competitiveness in order to effectively seize the market opportunities.

21. In the context of moving from commitment to implementation, he said that effective implementation of Aid for Trade required better coordination between donors and recipients in order to provide a more reliable platform for discussions aimed at addressing specific gaps which might occur in the course of implementing Aid for Trade. In allocating Aid-for-Trade resources, donors and agencies should be guided by priority needs, projects and programmes identified by developing countries and LDCs, as well as by their potential merit in relation to Aid-for-Trade objectives. Referring to the integration of trade in national and regional development strategies, LDCs were beneficiaries of the Enhanced Integrated Framework. The purpose of the EIF was to strengthen the LDCs' trade capacity, including the ability to identify their trade needs and priorities for development support. More specifically, the EIF was directed towards the objectives of supporting LDCs to mainstream trade into their national development strategies, establishing broad-based consultation processes involving the private sector, civil society organizations and relevant government agencies to formulate trade strategies, develop action matrices, and formulate priority project proposals.

22. On the relationship between the EIF and Aid for Trade, the LDC Group believed that the governance structure established under the EIF would be an essential foundation for strengthening the demand-side of Aid for Trade in LDCs. The Group was of the view that Aid for Trade should cover

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some trade capacity needs, particularly those identified in the Diagnostic Trade Integration Studies that were not addressed under the EIF. It should deal with, among other things, supply-side capacity building in the private sector development such as production constraints. He cited as examples diversification and marketing, export promotion; trade-related infrastructure – particularly physical infrastructure such as roads, ports, telecommunications, energy and electricity, water supply and sanitation – as well as technology transfer.

23. He also stressed the importance of complementing national Aid-for-Trade strategies with regional strategies and said that if LDC producers were to become competitive it was important that the costs of cross-border trade were dramatically reduced. For many LDCs the cost of getting goods to markets were dependent on costs incurred beyond their borders. For instance, the cost of transporting a container from a landlocked country in Africa to a seaport in another country was three to four times the cost of transporting that container to Europe from the seaport. If LDCs were to use trade as an economic development tool they would have to reduce transport costs as advocated under the Trade Facilitation agenda. This could best be achieved through regional and sub-regional cooperation.

24. He then expressed the LDC Group's appreciation of the regional Aid-for-Trade projects that had materialized, including the North-South Corridor project launched by COMESA, EAC and SADC to address infrastructure and energy challenges, as well as the Greater Mekong Sub-region (GMS) Programme, with support from the Asian Development Bank and other donors, to implement high priority sub-regional projects in transport, energy, telecommunications, environment, human resource development, tourism, trade, private sector investment, and agriculture. Although these projects would go a long way in helping to address the LDC's serious trade-related concerns, the LDC Group wished to stress the need to replicate the programmes in respect of improvement of other priority regional transport and transit corridors, such as, for example, the Central Corridor from the Port of Dar es Salaam, Tanzania to Rwanda and Burundi; the Northern Corridor from Mombassa, Kenya to Uganda, Rwanda, Burundi and the Democratic Republic of the Congo; and the Lamu–Southern Sudan–Ethiopia Corridor.

25. Regarding sustaining aid flows during the global economic downturn, he said it was important to recognize that developing countries – and LDCs in particular – were the most vulnerable to the current international financial and economic crisis in terms of its consequences. The LDC Group believed that the only viable solution to the current situation was to have a firm commitment to the multilateral trading system, including the successful conclusion of the Doha Round. The LDC Group hoped that the current crisis would not continue over a long period of time and negatively affect the flow of remittances, FDI and ODA which were important for supporting the economies of LDCs. It was further hoped that the development partners would approach Aid for Trade with the understanding that the goal was to reduce poverty by helping developing countries, particularly LDCs, adapt to and participate in global trade. In this regard, Aid for Trade could help countries to use trade as an engine for growth, but this assistance had to be recipient-driven and additional to existing development aid. The LDC Group was concerned that the levels of Aid-for-Trade flows seemed to be heavily leaning towards other beneficiaries instead of the LDCs who were the poorest of the poor. Aid for Trade should also be free of economic conditions, and must be adequate, predictable and complimentary to – and not a substitute for – better and fairer trade rules.

26. Turning to assessing the effectiveness of Aid for Trade, it had been agreed that monitoring and evaluation were an important part of the aid effectiveness agenda as observed in the recommendations of the Aid-for-Trade Task Force. The LDC Group believed that the evaluation of the performance of Aid for Trade should be guided by the Paris Declaration on Aid Effectiveness, and applicable to all parties involved, mainly donors, agencies and beneficiaries, including the private sector. The involvement of the private sector and civil society was in line with many LDCs' economic reform processes in which previous business activities had been minimized or abdicated. The private

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sector was basically left to generate the economic growth needed to achieve the poverty reduction targets. It had also evolved institutional mechanisms of interaction and consultation with the government through organizations which provided the main forum for public-private sector consultations on strategic issues pertaining to the creation of sustainable conducive climate for economic growth and development, and more responsible business operations.

27. In conclusion, he emphasized that the LDC Group honoured its cooperative responsibility in making Aid for Trade work for its respective countries in accordance with the agreed objectives and expectations. The LDC Group believed that these objectives would better be met if all donors and international financial institutions intensified their engagement with LDCs in a spirit of partnership to ensure that trade opportunities were truly and fully harnessed for economic growth and poverty reduction in LDC economies.

28. The representative of Egypt, on behalf of the African Group, commended the efforts of the WTO and all other organizations in organizing the Second Global Review. The Review was being held at a time when African countries were suffering from the far-reaching negative impact that the economic and financial crisis was having on their economic growth and national development plans. Aid for Trade was needed because many of the poorest countries had struggled to obtain global market opportunities due to their inability to produce or export efficiently. Most African developing countries – and all African LDCs – had neither the diversity of exportable products nor the production capacity to take immediate advantage from improved market access opportunities. Thus, while it had been argued that trade barriers were of concern to trade, poor supply-side conditions had often been a more important constraint on the export performance in various regions of Africa. Many African countries still needed resources to upgrade necessary trade-related infrastructure in ports, telecommunications, customs facilities and institutions. The African Group expected that the outcome of the Second Global Review of Aid for Trade would represent a step forward in realizing the benefits of this initiative and believed that the coming period would be critical in shaping the Aid-for-Trade initiative.

29. The Group therefore agreed with the four key objectives of the Second Global Review and wished to highlight some other important elements. With regard to moving from commitment to implementation, the African Group believed that the challenge ahead was to effectively move to the operationalization and implementation of Aid for Trade. This should be conducted in a manner that ensured developmental gains from the international trading system on both the regional and national levels. Effective implementation of Aid for Trade required better coordination between donors to step up disbursement levels, as well as between donors and recipients in order to provide a platform to discuss priorities and specific gaps which may occur in the implementation of Aid for Trade. With regard to integrating trade in national and regional development strategies, he said that high level political commitment at the national level was crucial in order to spearhead and monitor implementation of agreed policy reforms to integrate or mainstream trade in the national development strategies. Mainstreaming trade into overall national development plans and poverty reduction strategies therefore became an issue of urgent necessity. Although trade liberalization and reform were necessary for generating resources and growth to reduce poverty, they should be implemented together with complementary policy areas such as macro-economic, regulatory and structural policies. Given the fact that developing and least-developed countries needed to raise their capacity to mainstream trade into their overall national development strategies, it was also essential that discussions on Aid for Trade focused on addressing possible solutions to this problem. It was also important to promote wider experience sharing across the regions to strengthen the alignment and harmonization of programmes and procedures of external development partners as well as to deepen the regional integration process. In this respect, the African Group very much appreciated the role of the RECs.

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30. With regard to sustaining aid flows during the global economic downturn, the African Group believed that the principles of secure, additional and predictable Aid for Trade were important for the sustainability of Aid for Trade, especially in the current period of economic downturn. In that regard, effective and sustainable Aid for Trade would definitely lead to mitigating the negative impacts of the global economic downturn for both sides. To achieve this objective, the following elements were necessary: (i) Donor coordination. Greater donor and agency coordination and harmonization of procedures – at both the local and global level – was critical. Trade-related programmes and projects should be more coherent, both in terms of operations and policy. (ii) South-South cooperation. Technical cooperation among developing countries was a valuable tool to deliver effective results, due to better understanding of problems. The valuable technical expertise of the South could be channeled to project implementation through triangular schemes of cooperation.

31. Turning to assessing the effectiveness of Aid for Trade, he said that evaluation of the effectiveness of Aid for Trade should be guided by the Paris Declaration on Aid Effectiveness which should be applicable to all parties involved (donors, agencies and beneficiaries), including key principles such as country ownership, mutual accountability, aligning aid to national development strategies, effective donor coordination, harmonization of donor procedures, use of programme-based aid modalities, management for results, transparency, and predictable and multi-year commitments, which should be built into all programming. The private sector, as an actor in the field, was well placed to identify trade-related problems and bottlenecks. An increased dialogue between the public sector and private entrepreneurs would improve effectiveness in assessment of Aid-for-Trade needs, in diagnostics, implementation, as well as in evaluation of the effectiveness in implementation. Measuring the impact of Aid for Trade was the only way to gauge and demonstrate empirically that the assistance was indeed working and positively influencing trade. In order to facilitate the aforesaid measurement, it was prudent that the cumulative figures for ODA were disaggregated and that Aid-for-Trade funds were clearly identified within this overall donor funds disbursement channel.

32. The representative of the United States said that the US remained strongly committed to combining ambitious market opening results in the DDA with providing the wherewithal that helped developing countries to take fullest advantage of the openings created by the negotiations. This commitment was evident from the US contribution of US$10.3 billion in Aid for Trade since 1999 – an increase of US$4.3 billion since the 2007 Global Review. Over the last four years, US work on Aid for Trade had moved from initial efforts to bring high level attention to the issue to concrete work on implementation on the ground. It was clear that Aid for Trade was firmly established in the agenda for integrating developing countries into the global economy. There was, of course, more work to do and because implementation and design of trade-related assistance programmes primarily occurred in the field, what could be most effectively done in Geneva should be carefully considered.

33. Turning to the four main issues emphasized by the Director-General as areas for further work, the US believed that ways should be explored to ensure the continued participation of the private sector in the Aid-for-Trade process, including in Geneva-based activities. On enhancing the regional aspect of Aid for Trade, the US viewed regional integration as an increasingly important element of both trade and trade-related assistance for many countries, whether through RECs, free trade agreements or other vehicles. As a result, the US was ramping up its involvement with RECs and increasing its regional assistance activities, including for trade. With regard to South-South trade, the US considered that both South-South trade and development were increasingly being discussed and had the potential to offer tremendous opportunities to countries. And, finally, regarding evaluating impact, the US believed this to be an important and challenging area, particularly as many trade-related programmes were part of larger agriculture, infrastructure or other projects. For its part, USAID was currently conducting a study to determine how best to evaluate the trade-related programmes.

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34. Bearing in mind all these points, the need to continue work in several other areas, including areas that could be effectively covered in Geneva, should not be neglected. Partners and donors needed to be encouraged to mainstream trade in national development strategies or donor programmes. Information on what was happening in the field needed to be brought to Geneva, perhaps through a series of meetings of the Committee on Trade and Development focusing on specific topics. Trade-related elements of assistance programmes that might carry another label needed to be considered. For example, the global food security response would contain significant Aid-for-Trade components. Finally, it should be remembered that good assistance went with good policies.

35. The United States looked forward to consultations early in the autumn on the content of an Aid-for-Trade roadmap which would carry the work forward to the next global review and would participate actively in the development of that roadmap.

36. The representative of Germany said that he wished to focus his comments on four crucial areas, namely, (i) German contributions to trade-related assistance; (ii) current strengths and future programmatic approach of Germany's Aid for Trade; (iii) the delivery mechanism of German Aid for Trade; and (iv) the way forward and challenges for the ODA process.

37. On German contributions to trade-related assistance, he said that the joint EU Aid-for-Trade Strategy was the framework for, and determined the parameters of, Germany's future engagement in Aid for Trade. Germany was fully supportive of the EU commitment to increase trade-related assistance (TRA) to €2 billion annually by 2010 and was committed to fulfill its role in that regard. Germany's contribution to TRA was based on the German share in the EU budget and the European Development Fund (both approximately 22 per cent). Based on the pledge of €1 billion made by EU member States, this translated into a German TRA budget of €220 million per year as of 2010. Germany would also increase its contributions to the wider Aid-for-Trade agenda (beyond TRA) in line with the general increase in ODA. Aid for Trade played a major role in German development policy. Internationally, Germany was the third largest bilateral donor of Aid for Trade (after Japan and the US), and within the EU, too, Germany was the biggest bilateral donor of TRA and to the wider Aid-for-Trade agenda. All in all, more than three-fifths of all Aid-for-Trade flows originated from bilateral donors. In 2007 this amounted to US$15.8 million in bilateral funds, and US$9.6 billion in multilateral funds, of which US$2.7 billion was from the EU. To underscore this fact, he explained that during the period 2005-2007 Germany had increased its TRA from €160 million to €220 million. In the same period the total volume of its Aid for Trade rose from €780 million to €1.2 billion and its main objective for the coming years was to stabilize Germany's TRA well above €220 million and to make its Aid-for-Trade contributions more predictable and stable and to ensure that funds were additional.

38. With regard to the current strengths and future programmatic approach of Germany's Aid for Trade, he informed that the bulk of German Aid for Trade was delivered through bilateral development cooperation. He underlined that that there were no specific Aid-for-Trade funds, nor had Germany introduced any new channels of delivery. Germany's additional Aid for Trade would be delivered via the established procedures of bilateral development cooperation. Based on the relevant strategies of its partner countries, Germany had been aligning its support with partner priorities and, in this context, appreciated the fact that developing countries' ownership had been growing. Trade orientation and trade development was a decisive element in a country's path towards economic development and an indispensable part of national development strategies or relevant sector strategies for areas such as industrial or agricultural development. The long-term challenge was to intensify the mainstreaming of trade in national development strategies and to keep efforts on track. Trade was a multi-dimensional issue. Germany therefore approached Aid for Trade in a holistic and comprehensive manner as a cross-cutting issue. Its Aid for Trade, particularly measures in the trade policy and regulation and trade development category, addressed various focal sectors, most

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importantly private sector development, financial market development, and economic policy reform, but also agriculture and food security and fisheries and forestry.

39. Germany was well positioned to respond to a wide range of trade-related needs. Capacity development was at the centre of German development cooperation where it had a long tradition, broad knowledge and specialized implementing agencies for flexible delivery. On various occasions, the provision of long-term assistance and their presence on the ground had enabled German development cooperation players to build the trust necessary for successful Aid for Trade in politically sensitive areas such as trade policy and trade negotiations. The focus as well as the strength of German Aid for Trade in terms of raising developing countries' trade capacity was Trade Development and Building Productive Capacity. A recent analysis of the German Aid-for-Trade portfolio had highlighted some of the comparative advantages of German Aid for Trade, the most important being private sector development and agricultural development. In these key sectors, German Aid for Trade typically addressed all aspects, such as the development of business support services and institutions, banking and financial support, trade policy and administrative management, economic and trade reforms, as well as rules, regulations and standards that needed to be met for trade development. Capacity development and public and private institution building formed a particular comparative advantage of German development cooperation in the various intervention areas of Aid for Trade. The importance of capacity development had been clearly highlighted by partner countries in the OECD-WTO Aid-for-Trade questionnaire, as the Aid-for-Trade at a Glance 2009 report had confirmed.

40. Regional integration was also an important strategy – particularly given the current economic crisis – to increase intra-regional trade and regional value chains. Regional integration fostered stability and allowed countries to better shield themselves against a volatile global economy. In geographic terms – in line with the joint EU Aid-for-Trade strategy – Germany would focus its increases in trade-related assistance on ACP countries, especially countries in sub-Saharan Africa. Germany sought to increase intra-regional trade, thus strengthening regional integration, and to help ACP countries implement the commitments arising from international and bilateral trade agreements, including EPAs. While the bulk of German Aid for Trade was implemented at the national level in its partner countries, support for RECs had been increased. In sub-Saharan Africa in particular, German development cooperation could build on a long-standing relationship with RECs such as EAC, SADC, and ECOWAS that dated back to the 1990s. Support was provided in particular in the area of strengthening governance and organizational and management capacities in order to enable secretariats and commissions to bring regional integration processes forward. Germany was currently working on refining its Aid-for-Trade approach and a strategy document would be launched in 2010. Two documents existed that provided a quantitative and programmatic analysis of the German Aid-for-Trade portfolio: BMZ19, Discourse 013, "Shaping German Aid for Trade – Past Experience, Lessons Learnt, and the Way Forward"; and BMZ 2009, Special 160, "Monitoring German Contributions in Trade-Related Development Cooperation".

41. Turning to the third crucial area, namely the delivery mechanism of German Aid for Trade, he said that following the principles of the Paris Declaration on Aid Effectiveness, German development policy sought to strengthen partner countries' ownership. The demand-driven formulation of needs by partners was therefore a pre-requisite for German development cooperation to become involved. Germany encouraged partner countries to increase their efforts to include trade issues in their poverty reduction strategies and implementation plans and to develop, on that basis, their own trade policy that identified national priority export areas (regionally and internationally) and strategies to promote them. As was the case for agricultural or industrial policy, trade policy should form an integral part of a country's economic development strategy. A trade-related needs assessment was an integral part of

19 Bundesministerium Für Wirtschaftliche Zusammenarbeit (German Federal Ministry for Economic Development Cooperation).

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such a process and should be incorporated in the relevant strategies. The bulk of German Aid for Trade was implemented via bilateral development cooperation; there was no separate Aid-for-Trade fund that could be accessed. Therefore, if a partner country was in need of support in a specific trade-related area and wished to receive German assistance, this should be brought up during the consultations between the German Government and the Government of the partner country. The German Embassies and Missions would be pleased to help with the initial contact. In many cases officials from the BMZ were part of the Embassy staff and could provide further information about the procedures relating to German development cooperation.

42. Finally, on the way forward and challenges for the Aid-for-Trade process, Germany wished to emphasize that much had been achieved since the start of the Aid-for-Trade process on the part of partner countries, donors and multilateral institutions. The Aid-for-Trade at a Glance 2009 report documented these impressive achievements. Aid for Trade was now clearly in the stage of implementation as trade became more and more mainstreamed in national or regional development strategies. However, if Aid for Trade was to be a success story, further improvement of monitoring and evaluation was needed. The target should be to enhance the quality of Aid-for-Trade measures. In the area of monitoring, additional efforts were necessary on the part of donors and the OECD to complete the missing part of trade development activities. Trade development was one of the most powerful tools within the Aid-for-Trade agenda for increasing partner countries' trade capacity and Germany therefore regarded improved monitoring of trade development as indispensable. As for indicators and the measuring of results, he said that the current country fact sheets provided a good basis for pushing the political process both at the international and national levels. Indicators contributed to mainstreaming trade in partner countries' development agendas. However, in the field of core evaluation of Aid-for-Trade activities and, more particularly, in the field of measuring trade capacity achievements, much needed to be done. Germany attached great importance to making progress on the elaboration of indicators in order to enable developing countries to better measure what had been achieved in trade capacity development. The policy hypothesis of Aid for Trade was that trade integration spurred growth and, among other things, reduced poverty, and it was on this promise that Aid for Trade had to deliver. Hence, in the years to come, mainstreaming trade in national development strategies as well as further examining and clarifying the linkages between trade, economic development, and pro-poor issues would rank high on the agenda.

43. The WTO had an important role to play in monitoring Aid for Trade and in related awareness-raising and was indispensable in terms of facilitating dialogue. However, in view of the challenges to come, Germany considered it essential that partners and donors intensified the discussion and strove for a more inclusive process geared toward fruitful cooperation between the trade and development spheres. From Germany's point of view, these features were key to future success. One possible way of achieving this was to enlarge the informal Aid-for-Trade Advisory Group. The Advisory Group could, for example, be broadened to encompass representatives of multilateral institutions (WTO, OECD) and multilateral donors (World Bank, UNDP, UNCTAD, ITC, Regional Development Banks) and should, in particular, also include representatives of major developing-country groups and bilateral donors (which provided three fifths of all Aid for Trade). In the effort to achieve an inclusive process with partner countries, the OECD also had an important role to play. The OECD's Development Cooperation Directorate – in cooperation with the WTO – had the mandate to organize outreach events with representatives of developing-country groups. Among others, the topics of indicators selection and mainstreaming trade in national development strategies could be discussed from the perspective of the trade as well as the development community. It was on this basis that Germany hoped to generate additional momentum for progress on the Aid-for-Trade agenda.

44. The representative of Norway said that Norway had supported the Aid-for-Trade initiative from the beginning and had presented its Government's Action Plan in 2007 during the First Global Review of Aid for Trade. She said that the major part of Norway's cooperation was delivered through

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multilateral agencies, and the Action Plan had three priority areas: (i) good governance in trade matters; (ii) women and trade; and (iii) regional trade. Norway believed that these areas were, and would continue to be, keys to success.

45. The Second Global Review had been a wide-reaching and comprehensive exercise. The regional dimension had been well-covered. Comprehensive cross-border infrastructure investments such as the three case studies presented that morning would unleash significant new trade flows and were particularly important to landlocked countries. At the same time, the software infrastructure supplemented the hardware and could yield considerable gains. A case in point was the project Norway had listed as a best practice, namely, cooperation in the SADC countries to overcome technical barriers to trade – SADCAS. The private sector and regional organizations also had a decisive part to play in the regional context, and there was need for a clearer division of labour to develop the best models for private-public partnerships. The SADCAS project on standards was also an example of how to promote good governance in trade. Good governance and the fight against corruption should remain at the core of the Aid-for-Trade agenda and instrumental in this regard was increased transparency and trade facilitation measures. Needless to say, a successful completion of the Doha Round would be the most important contribution to providing new market openings for products of interest to developing countries – and to LDCs in particular. Market access was the main vehicle; Aid for Trade was there to help it accelerate.

46. One concrete link between Aid for Trade and the DDA was to be found in the negotiations on trade facilitation. Issues related to technical assistance and capacity building were a crucial part of these negotiations. The Global Review provided added information and hopefully comfort to negotiators, on the one hand through reinforcing the understanding that a great deal of resources was going to trade facilitation, and, on the other hand, that partner countries were mainstreaming trade facilitation into their development plans. Here, she wished to highlight that, with the exception of some very useful references made during Session 7 on assessing impact and effectiveness, the aspect of women and trade had received less attention than it should have done. Limited work had been done so far on the gender component of Aid for Trade and Norway strongly believed that it was necessary to focus more on both the effects of trade on the situation of women as well as the contribution of women to trade. A stronger emphasis on gender-specific analysis and design of trade development programmes would improve the agenda further.

47. In conclusion, she said that Norway supported the call to strengthen the Aid-for-Trade initiative by reinforcing the country and regional component. At the same time, improvement of monitoring and evaluation – with targets for indicators and achievements – should be continued.

48. The representative of Paraguay, on behalf of the Landlocked Developing Countries (LLDCs), expressed gratitude to the WTO for convening such an important gathering of Ministers, government officials, international organizations and regional banks to assess what had been accomplished with the Aid-for-Trade initiative since 2007, and to jointly outline the path for the future.

49. He explained that the LLDCs were a heterogeneous group of 31 developing countries from different regions of the world sharing the condition of being landlocked. Such condition implied that LLDCs had weak institutional and productive capacities, were highly vulnerable to external shocks and suffered from remoteness from world markets. Moreover, they faced higher transportation costs, were dependent on the physical, economic and political conditions existing in their transit countries and were likely to be much more sensitive to economic conditions at the regional level because of the multitude of borders they share.

50. The economic and financial crisis had hit developing countries hard and had exacerbated the vulnerability of the LLDCs. As a result of the crisis, these countries – many of which were single commodity exporters – had seen their revenues depleted by falling world prices. Many had been

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crowded out of diminishing markets for trade and general finance and had been badly affected by lower remittances which, for some LLDCs, represented a significant share (more than 20 per cent) of their GDP. The landlocked condition of these countries made it imperative for the LLDCs to attain levels of economic efficiency and competitiveness that allowed for compensation for such condition. The Aid-for-Trade initiative was therefore critical in this context because it would allow the LLDCs to address structural weaknesses in their economic systems and institutions in preparation for the recovery.

51. LLDCs had made important strides for a more effective engagement in the Aid-for-Trade initiative. For example, in close collaboration with development partners, the LLDCs were working to identify and prioritize their trade needs and establish systems at the national and regional levels to enhance trade effectiveness. A number of aspects which the LLDCs considered critical in moving ahead included a sustained effort from development partners to steadily increase AfT flows within an overall expanding ODA portfolio. The drying up of private capital made it more urgent than ever not only to maintain, but to increase ODA, especially to vulnerable developing countries such as the LLDCs, in order to attract and keep investments in the fundamental social and economic sectors of their societies in the face of the crisis. LLDCs were committed to the attainment of the MDGs and considered ODA, including Aid for Trade, as a critical enabling factor to make this possible.

52. LLDCs welcomed a more balanced distribution of Aid-for-Trade resources so as to avoid concentration in a few countries and allow for improvements in the transparency and predictability of Aid-for-Trade flows. This was imperative to enable LLDCs to better integrate Aid for Trade in their planning processes to leverage the potential of trade for poverty reduction, and to improve the alignment and harmonization of Aid for Trade with development priorities at the country and regional levels. The LLDCs also supported an enhanced focus on the regional dimension of Aid for Trade which it considered as critical for addressing the comprehensive array of challenges faced by countries with no direct access to the sea.

53. In conclusion, the Aid-for-Trade initiative constituted an important enabling factor that would allow developing countries to better integrate in the world economy. Fair and equitable trade rules and transparent and open markets continued to be a priority, especially for developing countries, including LLDCs. In this regard, she emphasized that the LLDCs attached great importance to the successful conclusion of the Doha Round in line with its overall development dimension as it was originally conceived. In this regard, the LLDCs reiterated their commitment to contribute to the success of the Doha Round and hoped that, together, WTO Members would soon be able to complete this endeavour.

54. The representative of Canada said that the Second Global Review had helped to keep focus and concentration on the Aid-for-Trade programme and had also made it possible for donors, partner countries and implementing agencies to have an exchange of information and experiences on what had been learnt and on good practices. She said that Canada remained determined to ensure that its aid was effective. In this respect, since 2007 Canada had taken specific measures to enhance concentration, the effectiveness of its aid and the overall accountability of what it did. All Canada's food aid had been untied since 2008 and all its development aid would be untied by 2012-2013. Furthermore, 80 per cent of Canada's bilateral aid was concentrated on 20 countries. On 20 May 2009, the Canadian International Cooperation Minister had announced the three priority areas which would be the basis of Canada's work in the future: (i) increasing food security, (ii) offering greater possibility to children and young people, and (iii) promoting sustainable and economic development.

55. Turning to Aid for Trade more specifically, she said that Canada was actively engaged at the bilateral, regional and multilateral levels, and supported Aid-for-Trade initiatives in Africa, the Americas and Asia. According to the Canadian International Development Agency's (CIDA) latest figures, Canada's Aid-for-Trade expenditure in financial year 2007-2008 had been CAD$500 million,

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up from CAD$465 million in 2006-2007. This represented approximately 17 per cent of CIDA's total aid. Any increases were being drawn from Canada's expanding aid envelope. Additionality, therefore, was not coming at the expense of other sectors. She explained that Canada's Aid for Trade was primarily directed at building productive capacity, particularly in agriculture. The World Bank had estimated that GDP growth from agriculture benefited the incomes of poor people two to four times more than GDP growth in other sectors of the economy. In this regard, Canada was looking at further assistance through agricultural development as part of its Food Security Strategy. With its new strategy priority on sustainable growth in mind, Canada would support initiatives that sought to increase the growth rate of an economy, particularly through the private sector, which generated nine out of ten jobs in developing countries. Without the capacity to produce competitively, countries would not have the prospect of exporting to begin with.

56. Canada continued to view the EIF as a key instrument in facilitating national ownership of Aid for Trade in LDCs and had underlined its commitment by its initial pledge of $19.2 million over five years. Canada saw the EIF as an important tool to prioritize trade-related programmes and projects for those countries that needed them the most. Canada therefore looked forward to the timely implementation of the EIF initiative under an effective management system that focused on real development results.

57. As a member of the G20, Canada had made commitments towards maintaining an open trading system. It was imperative that trade continued to flow and global markets remained open to mitigate the downward pressure on growth from the current global economic crisis. Aid for Trade was now more vital than ever to helping developing countries cushion the effects of the economic downturn while at the same time building their productive and trade capacities so they could take advantage of the global market, particularly once growth resumed. In order to facilitate trade flows, Canada had recently finalized a US$200 million contribution to support the International Finance Corporation's Global Trade Liquidity Program. Canada was the first country to officially participate in this new World Bank-led initiative that brought together governments, private sector banks, and international finance and development institutions to support much-needed trade finance in developing countries.

58. She then underscored Canada's belief that the Aid-for-Trade initiative could be complemented by a successful conclusion of the Doha Round. Canada continued to believe that a timely, ambitious, and balanced outcome in the Round was the most effective way to realize trade's potential as a tool for development and to promote trade in goods and services by lower-income countries. As a trading nation where one in three jobs depended on exports, Canada believed that trade held great potential for development and was prepared to do its part to assist low-income countries build their productive and trading capacities so that they, too, could take advantage of a wider global market. The Aid-for-Trade initiative was an essential mechanism to help them in this endeavour.

59. The representative of Senegal said that Senegal was grateful to the WTO for having organized the Second Global review of Aid for Trade and wished to express satisfaction at the approach which had been taken in the course of the debate. Senegal believed that the discussion had allowed for a great deal of progress to be made. The discussions had started with an approach in terms of the quantity of aid given and received and had moved to evaluating the efficacy of that aid and the strategy by which it was being disbursed. It was clear that the AfT debate had changed direction particularly if one compared the terms used in the First Global Review held in 2007 and those that had been used in the course of the present debate. Senegal welcomed this trend and believed that it responded to the desires of those countries that were aid beneficiaries.

60. Turning to evaluation, he said that the first priority issue to be taken into account was the need to look at an effective correlation between the quantity of aid received and the improvement of export capacity in beneficiary countries as well as the increase or not in beneficiary country exports.

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Throughout the last two days of discussion Senegal had sensed the importance that had been attached to the need to develop physical infrastructure in order to enhance the effectiveness of aid. In the past, donors had not attached much importance to this, feeling rather that Aid for Trade should not concern infrastructure because it was something that should be covered by ODA. The problem of infrastructure, however, was considerable. It was dealt with to a certain extent during the First Global Review of Aid for Trade to the satisfaction of beneficiary countries and especially LDCs, and this had particularly been the case, too, during the present Review.

61. Senegal welcomed the increasing stress being placed on inter-regional trade and regional integration in general. Despite the insistence of Aid-for-Trade beneficiary countries, the regional aspect was not always one which had been given high priority by aid donors who often focused more on country programmes. However, country programmes had not always given the results one would like to see, particularly with regard to LDC country programmes. These countries did not really respond to the stimulus of Aid for Trade in the way one would have liked. This was usually the result of their weakness in terms of infrastructure, development and competitiveness. A solution to this could be in the organization of regional markets where those particular countries would be able to enhance their competitiveness and use economies of scale to gain experience before going out into the wider world. In the past donors had tended to do things the other way round by first trying to get LDCs integrated into world trade which they were unable to do because LDCs could not meet the supply and competitiveness requirements. As a result, country programmes had very mitigated results. Senegal therefore encouraged aid donors to give greater and stronger support to RECs in their integration efforts. This approach would boost the chances of success in country programmes, especially those in LDCs. Senegal wished to place on record its satisfaction at the fact that these various concerns were now being better taken into account in the course of the current Aid-for-Trade Global Review. The more long-term ambitious viewpoint of the Second Global Review was the way to go and was better than a figure- or quantity-based approach that had been taken for the First Global Review. Senegal appreciated the fact that Director-General Lamy had urged that specific and effective Aid for Trade be provided and hoped that his initiative to promote development in general would be successful.

62. The representative of Mali referred to the case of cotton. As Members were aware, since 2003, there had been unanimity with respect to the sectoral cotton initiatives in the framework of the Doha Round for development. More specifically, paragraphs 11 and 12 of the 2005 Hong Kong Ministerial Declaration had set priorities in order to try to find a lasting solution to the very serious problem faced by cotton producers in developing countries in general, and in Africa in particular. This had been the case particularly for the Cotton-4 (C-4) countries – Benin, Burkina Faso, Chad and Mali – particularly in light of distorting subsidies in the field of cotton. At the end of 2005 the programme on Aid for Trade had been launched and, in 2006, the Director-General had established a framework for a consultation mechanism for the benefit of development aid in the cotton sector. The cotton sector served as the first example of a specific illustration with respect to Aid for Trade which went above and beyond the trade aspect. From 2006, this mechanism had regularly gathered together countries to stake stock of the reforms that were being undertaken in terms of institutional and regulatory measures and had also assessed aid which had been announced, mobilized and received from traditional donors. The aim of this mechanism was to look at flexibility with regard to the most vulnerable countries – which was what the African countries wanted – and also to assist these countries since trade rules would not be sufficient to re-launch their economies. At the last session of this consultative mechanism, held in November 2008, the African countries, through the C-4, had expressed very positive appreciation of progress made in African countries since 2006 in the context of Aid for Trade with a specific focus on cotton.

63. African countries had also had the opportunity to express gratitude to the partners, now called non-traditional partners, in the framework of South-South cooperation pertaining to the cotton sector. In this respect, Mali wished to express thanks to the representatives of emerging countries (i.e.

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Argentina, Brazil, China, India, and Chile) who had spoken in the Session on South-South Cooperation Experiences. This, in terms of cotton, could also be taken as an example concerning the implementation of Aid for Trade. As a follow-up to the cooperation agreement signed in November 2008, the Brazilian Cooperation Agency had signed, in February 2009, an ambitious cooperation programme with the C-4 countries. Although the African countries had expressed concerns regarding the distorting effects caused by subsidies, the same countries had also admitted that efforts and headway had to be made at the regional level to enhance production and to undertake reforms. In light of these significant needs, Brazil, together with other emerging countries (e.g., China and India), undertook to launch the cooperation programme with the aim of assisting the four countries to seek adaptive capacity focusing on biotechnology (e.g., the treatment of soils, seeds, plant growth) and strengthening the capacity of researchers, technicians, and producers to train them in innovative technology and to prepare dissemination tools in order to enhance the production of cotton in the C-4 countries. Mali fully supported the statements made on behalf of the African and ACP Groups and had had the opportunity to work in a very active fashion with those delegations. In conclusion, Mali wished to extend its congratulations to the WTO Secretariat, led by Director-General Lamy, and also to the OECD.

64. The representative of Morocco congratulated Director-General Lamy and Deputy Director-General Rugwabiza for the excellent way in which the Second Global Review had been organized and on the quality of the on-going work on Aid for Trade and the very considerable efforts that were being made to ensure that the initiative was successful. The fruitful and very high quality debates that had taken place over the last two days of the Global Review involving representatives of governments, leaders of international organizations and regional development banks were an indication of the success of the Aid-for-Trade initiative.

65. He said that Morocco had been a member of the Aid-for-Trade initiative since it was launched in 2005 and had now moved on to set up its own National Aid-for-Trade Committee as recommended by the WTO. That Committee was responsible for implementing the Aid-for-Trade initiative within Morocco's borders. All could acknowledge the fact that Aid for Trade in a time of international crisis was a very important tool for developing countries and least-developed nations to use to improve and expand their exports and promote their trade to alleviate the impact of the crisis. In this context, Morocco welcomed the renewed commitment of donor countries to maintain – and even increase – aid flows to beneficiary countries in order to assist developing countries to prepare for post-crisis recovery. Morocco had for some years been implementing a development strategy based on major sectoral projects. As part of this, it had recently set up a commercial strategy called Maroc Export Plus which entailed boosting and widening the range of Morocco's exports as well as concentrating on priority sectors, seeking out more attractive export markets, and offering support to enterprises whose work was export oriented. In order to implement this trade strategy, Morocco needed, as part of the Aid-for-Trade initiative, to have consistent and continued financial support from donors and technical support and assistance, as well as advice to help identify trade-related obstacles and work out how to overcome them.

66. In conclusion, he said that Morocco was convinced that South-South cooperation was the best way of all for promoting regional trade. In this regard, Morocco supported, and was working to tighten, cooperation links with its African neighbours and with other developing regions. Morocco hoped to increase its mutually beneficial South-South cooperation with other countries based on an exchange of experience and the use of innovative mechanisms such as, for example, decentralized cooperation, partnerships between the private sectors and trade alliances as well as triangular cooperation.

67. The representative of New Zealand said that progress made over the past two years was significant both in increasing funds for Aid for Trade and also in mainstreaming trade in countries' development strategies. However, one should not become complacent and in the current difficult

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economic times efforts should be intensified to ensure that Aid for Trade was effective and that it enabled developing countries to realize the opportunities trade provided to advance their economic development and reduce poverty. Protectionist pressures that would reduce the opportunities that developing countries enjoyed should also be avoided, and gains through a rapid and ambitious conclusion to the Doha Round of negotiations should be secured.

68. The Government, elected in late 2008, had placed a greater emphasis on supporting sustainable economic development through New Zealand's official development assistance, revising NZAID's mandate to reflect this. This increased focus on broad-based sustainable economic development would include support for activities that helped enable developing countries to expand their trade – by improving infrastructure and related services, stimulating private sector development, and improving market analysis and support. In 2007, New Zealand had provided NZ$39.3 million in Aid for Trade, up 70 per cent from 2005. Aid-for-Trade funding would increase in both absolute and proportionate terms as New Zealand's overall ODA budget increased and greater emphasis was given to economic development activities. Building the capacity of developing countries to participate in trade remained critical. This was particularly evident as regards the Pacific Island countries and New Zealand encouraged other donors not to lose sight of the needs of small vulnerable economies. For its part, New Zealand was pursuing greater coordination amongst donors in the Pacific around trade-related activities, and examining what could be done better to deliver concrete measurable results for businesses and individuals. New Zealand encouraged its partners to mainstream trade in their development strategies to help it, as a donor, to best respond.

69. In conclusion, New Zealand hoped that the Second Global Review would help maintain momentum of what was a vital initiative.

70. The representative of Mozambique expressed Mozambique's support of the statements made on behalf of the ACP, African and LDC Groups. During the sessions over the past two days, the importance of Aid for Trade had been highlighted as had the need for LDCs to have a share in global trade in order to benefit from trade liberalization and contribute to their economic and social development. Many Members had also indicated that one of the most effective ways to realize the potential of trade as a tool for development and poverty reduction was through meaningful market access outcomes combined with the necessary production capacity, investment attraction, development and improvement of trade-related infrastructures. It was clear that countries such as Mozambique could not achieve these goals without the assistance of development partners. That was why Aid for Trade was a good initiative and its main objective should be to enable developing countries to use trade more effectively to achieve their economic development objectives to promote growth and poverty reduction.

71. Aid for Trade was very relevant for Mozambique. It was needed to improve Mozambique's business environment in order to attract more investment which was critical for its development and to addressing supply-side constraints and increasing its export competitiveness. The private sector needed to be empowered in order to produce and export goods and services. Mozambique also needed assistance to build the necessary capacity to negotiate and implement various trade agreements and to strengthen civil society and public-private sector dialogue.

72. Given the link between improved market access and the necessary supply capacity, Aid for Trade should be provided as an addition to the existing official development assistance and without conditionality. In this regard, Mozambique wished to stress the need for predictable Aid-for-Trade flows since this would help it to develop its plans and realign them with those of the region. A mechanism also needed to be found which could help identify and monitor more exactly the destination of funds and their use by countries. Strengthening country ownership and enhancing management for results were essential to ensure that expanding Aid for Trade delivered larger benefits to developing countries, particularly LDCs.

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73. Aid for Trade was also vital for Mozambique to diversify production and exports so that it could respond to the opportunities that trade liberalization was creating. Efforts must be made to ensure that Aid for Trade reached its objectives of promoting growth and poverty reduction, of addressing infrastructure bottlenecks, of establishing mechanisms that reflected national development priorities and strategies, and of assisting with regional integration and helping intra-African trade, for example as part of the North-South Corridor initiative.

74. He concluded by saying that it was now time to move to effective implementation of Aid for Trade. Mozambique was committed to the Aid-for-Trade initiative and would continue mainstreaming trade in its Poverty Reduction Strategies, including the updating of its Diagnostic Trade Integration Study and its action matrix under the EIF. Mozambique would like to see WTO members and partners alike engaged in concrete actions and commitments for Aid-for-Trade implementation initiatives at both regional and national levels. A strong commitment would give an added impetus to the ambitious Aid-for-Trade mandate agreed at the 2005 Hong Kong Ministerial Conference which aimed to help developing countries build supply-side capacity and infrastructures to take advantage of multilateral trade. In this regard, Mozambique looked forward to the expeditious conclusion of the Doha Round.

75. The representative of Dominica, on behalf of the Organization of Eastern Caribbean States 20

(OECS) first of all wished to recognize and congratulate the Director-General for his role in advancing the AfT agenda and to recognize the work done by the OECD, regional development banks and other regional and international organizations in the lead up to the Second Global Review. He also wished to associate the OECS with the statements made by the ACP, SVE and CARICOM Groups.

76. He then highlighted and reiterated several points on the issue of Aid for Trade and the way forward. The OECS Member States were among the smallest and most vulnerable Members of the multilateral trading system and, while they were classified as upper middle-income countries based on per capital Gross National Income (GNI), it was important to emphasize that they faced significant structural and capacity challenges to production and trade. These challenges included high production and infrastructure costs, small markets, vulnerability to external shocks, negative terms of trade and high external debt. Economies of the OECS countries were very open and were largely dependant on what happened in the rest of the world. The current global economic crisis had therefore exerted severe external shocks to the economic systems of the OECS and had had negative impacts on OECS Member States' balance of payments through downturns in the tourism sector, FDI, and flows of remittances. In addition, the OECS countries were confronted with the need to undergo comprehensive trade adjustment and economic repositioning in the face of increasing globalization, regional integration, economic interdependence and trade liberalization. It was for these reasons that delivering on the promise of Aid for Trade was important to the OECS member states. Aid for Trade was a means for the OECS to address the challenges they faced in adjusting to the economic shocks from the current crisis, trade liberalization – including preference erosion – and to build medium- to long-term competitiveness of the productive sectors thereby translating the promise of increased market access into improved trade performance. In that regard, the Aid-for-Trade at a Glance 2009 report highlighted the priorities identified by OECS member states in their responses to the OECD-WTO Aid-for-Trade questionnaire which included trade policy analysis, negotiation and implementation, competitiveness, regional integration, export diversification, adjustment costs, and infrastructure development.

77. A critically important area that needed to be addressed at the national level was the mainstreaming of trade in national development strategies. This had been recognized by each OECS

20 Antigua and Barbuda, Dominica, Grenada, St. Kitts and Nevis, St. Lucia, and St. Vincent and the Grenadines.

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member state and steps were being taken to address this issue. Work was also currently ongoing on revising and updating the OECS Development Strategy. There was also need to address the capacities of the OECS member states to identify and clearly articulate their needs, to design necessary interventions, and to effectively absorb the aid when it was received. The role of the private sector was critical in this process and interventions were needed that prepared the private sector to play multiple roles including as advocates, partners in designing interventions, and beneficiaries of aid. In order to address these needs, Aid for Trade must be sufficient, additional, predictable, transparent, and must respond to the needs articulated by beneficiaries. Aid for Trade should be simple to access and any adjustment assistance facility should be delivered in a timely manner. The OECS would also like to see a component that addressed the high level of indebtedness of the region.

78. The OECS did not perceive the outcomes of Aid for Trade as being compensation for loss of preferences. Aid for Trade was also expected to be reflective of outcomes in the DDA and therefore should result in the provision of additional financing (or new sources of funds) and not the "recycling" or repackaging of existing financing instruments. Finally, Aid for Trade should be primarily in the form of grants and preferably through budgetary support mechanisms.

79. In conclusion, the OECS looked forward to attaining the objectives that had been set for the Second Global Review of Aid for Trade. In particular, that there was a move from commitments that had been made to delivery and implementation; that the existing and new donors ensured that aid flows were sustained and increased; and that there was greater effectiveness in assessing and monitoring Aid for Trade at national, regional and multilateral levels.

80. The representative of Bangladesh congratulated the WTO for organizing the Review and expressed appreciation to Director-General Lamy for the successful coordination of the event. Bangladesh wished to fully associate itself with the statement made by Zambia on behalf of the LDC Group. Bangladesh recognized the importance of Aid for Trade as a means to address the supply-side constraint in developing countries, especially LDCs and he said that a Working Group on Trade-related Technical Assistance had been constituted comprising representatives from public and private sectors to deal with the issue. Bangladesh – together with 27 LDCs – had completed the OECD-WTO Aid-for-Trade questionnaire in which some of their priorities had been identified to be put before appropriate donors in consultation with multi-stakeholders. Bangladesh had recently joined the EIF and was committed to mainstreaming trade in its national development plans (i.e. PRSP). Although this was a necessary step it was not sufficient. If donors did not mainstream trade into their programmes, these efforts might not bear fruit. Additionality of reserves was also an important element, but it should not come at the expense of social factors such as health, education, etc. Bangladesh was confident that additionality should be available and available as a compliment to the DDA. In this regard, he wished to highlight the importance of granting duty-free quota-free market access to LDCs as committed by Ministers in Cancún. He then referred to the Global Trade Liquidity Program that had recently been launched and the US$50 billion of trade finance programmed over the next three years and said that, as the hardest hit Group from the financial crisis, LDCs should benefit from this without conditionality. In other words, countries that were most deserving should receive the maximum.

81. The representative of Chinese Taipei said that Aid for Trade had been mainstreamed into its overall foreign aid strategy the details of which had recently been released in its White Paper on Foreign Aid Policy: Progressive Partnerships and Sustainable Development. Chinese Taipei's Aid-for-Trade related projects focused on areas where it considered it had advantages and strengths, such as: (i) in agriculture, by sending technical teams abroad, financing agricultural infrastructure, providing vocational training; (ii) in private sector development, by encouraging strategic operation alliances and strengthening institutional capacity; and (iii) in information and communication technology, by assisting partner countries set up digital centres, and establish e-government. The Chinese Taipei International Cooperation and Development Fund (ICDF) had therefore been given a

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mandate to facilitate Aid-for-Trade related projects. For example, in September and October 2008, the WTO Committee on Sanitary and Phytosanitary (SPS) Measures had held a series of workshops covering good practices in SPS-related technical cooperation, during which two ICDF projects (Papaya Export Promotion Project in Guatemala, and Pesticide Residue Testing and Training project in Panama) had been nominated as models for best practice. Chinese Taipei also responded to Aid for Trade through cooperation with international organizations such as the AITIC (Agency for International Trade Information and Cooperation) and had made, and would continue to make, appropriate contributions in the different areas of the Aid-for-Trade initiative. Chinese Taipei remained committed to helping other developing Members participate in and benefit as much as possible from the multilateral trading system.

82. The representative of France thanked the WTO Secretariat and the Director-General for recalling that the essential nature of Aid for Trade was for the future of developing countries and for the most vulnerable amongst them. He commended the organization of the Second Global Review of Aid for Trade and the high quality work undertaken that had enabled countries to consolidate and reaffirm their commitments.

83. France believed that Aid for Trade was a significant pillar in supporting developing countries to further integrate into the trading system and to fight against poverty and accelerate economic and social development. To demonstrate its resolve and to strengthen its commitment, France had recently adopted a strategic Aid-for-Trade framework supporting regional integration which gave priority to regional trade policies and development of competitive supply side at national, regional and international level. In addition, it showed that other aid flow channels should be explored – such as loans to the private sector – to sustain trade development. The strategic framework aimed to increase efforts by 50 per cent compared to 2002-2005. These efforts would, for example, lead to technical assistance reaching on average €150 million from 2010 onwards. Fifty per cent of this increase would be allocated to ACP countries which was France's response to the international commitments of the European Union. Overall, France’s global Aid for Trade would account for a minimum of €850 million per year from 2010 onwards.

84. In conclusion, he said that in addition to concessional or grant Aid for Trade, support for developing trade required other instruments such as loans to the private sector, particularly to small- and medium-sized enterprises. France was of the view that these instruments would need to be further reviewed in-depth and invited partners to further highlight and define their needs taking into account the regional dimension of their development strategies.

85. The representative of Australia said that Australia believed that international trade was a critical avenue to faster poverty reduction and development. No country had achieved strong and sustained economic growth – and thus rapid poverty reduction – without participating in international markets. The global recession had highlighted the importance of trade to development and restoring international trade was crucial to achieving the MDGs. Developing-country participation in global trade liberalization was one of the most effective ways of delivering developing countries a better deal in world trade, encouraging development and reducing poverty. Australia strongly supported trade liberalization and continued to push for a successful conclusion to the Doha Round as soon as possible. He said that, as leader of the Cairns Group, Australia, had long supported international efforts to liberalize agricultural trade, particularly through the elimination of trade distorting domestic support, export subsidies and barriers to market access. Australia had also provided duty- and quota- free access for products from LDCs since 2003 and it urged other members of the international community to offer comprehensive and unqualified duty- and quota-free access to LDCs.

86. Trade liberalization alone, however, was not enough to create opportunities for development. Although support for open markets and resisting protectionism had to be continued, developing countries faced many challenges in realizing the benefits of increased trade. These countries needed

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the capacity to translate the benefits from trade into real development outcomes. Aid for Trade would help developing countries and LDCs become active participants in, and reap the full benefits from, the multilateral trading system and the global economy. He informed that Australian development assistance to improve countries' trade prospects now represented about ten per cent of its overall aid programme and was expected to grow. Now, more than ever, it was vital that donor and partner countries worked together to maintain the momentum of Aid for Trade. Australia was committed to helping partner countries overcome barriers that constrained their ability to benefit from global trade. In this respect, it had recently more than doubled its contribution to WTO development assistance activities to $2.5 million in 2009. Australia was also supporting a new trade and economic agreement in the Pacific region which would enhance the ability of Pacific Island economies to take advantage of existing or new market access opportunities in Australia and other parts of the world as well. Australia's aim was that this new agreement, currently known as PACER Plus, would significantly improve the dividends to Pacific economies of their individual efforts to improve the trade and economic conditions within their countries.

87. The global recession had heightened the focus of the world on international trade. With an extra 90 million people expected to remain in extreme poverty as a result of the global recession, Aid for Trade was one of the best ways donors could help developing countries to facilitate recovery from the crisis and position them for growth and faster progress towards the MDGs. Australia believed that continued trade liberalization, coupled with the implementation of appropriate measures to improve the domestic environment, would be critical to restoring confidence and growth to the global economy.

88. The representative of Cape Verde said that Cape Verde attached great importance to the predictability and flexibility of ODA, while at the same time ensuring sound, transparent, and responsible management of the resources made available to it by development partners. It was equally crucial that in the new phase of Cape Verde's development, with its graduation from the category of LDC, a new model and paradigm in relations with its partners be developed and reinforced. In this regard, five key areas for support stood out. These included: (i) improving the global trading system to make it fair; (ii) providing special infrastructure financing; (iii) supporting capacity building and capability upgrading; (iv) facilitating institutional development, and (v) opening up the national policy space and allowing countries to lead their own development agenda.

89. Cape Verde was a firm believer in trade and, as a nation, had no option but to trade and to be active in the process of globalization. As a small island developing state, with limited population and no resources, this was especially so in the area of services. As part of its agenda for economic transformation, Cape Verde's target was to become an international hub for services. Cape Verde specifically needed additional resources to complement its efforts and to upgrade its capacity and national capabilities in order to integrate and compete effectively in the world economy. It was in this light that Cape Verde conducted a DTIS, followed the processes, undertook the studies, and prepared an action plan which was approved by all stakeholders. It was still waiting for the support that was needed, especially from the EIF, with regard to the implementation of the DTIS Action Plan.

90. Although Cape Verde was doing its best as far as its economic transformation was concerned, there was a need for support if the gains of recent years were not to be lost. Cape Verde continued to place a high value on Aid for Trade in the context of it being a viable policy response to the need to assist SVEs such as Cape Verde in building and increasing productive capacities and international competitiveness. It was the only way that benefits could be seized from market access opportunities. In this respect, Cape Verde recognized the need for a "scaling up" of aid given to ACP countries, particularly SVEs and LDCs, to ensure that Aid for Trade remained an important share of ODA and that the funding provided took into account both regional integration and country-specific priorities. Cape Verde wished to call upon all development partners to pay special attention – particularly given the current critical global economic situation – to middle-income countries, especially lower middle-

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income countries. There was a need for an international consensus on initiatives which would empower countries such as Cape Verde to liberate their productive capacities. These countries should therefore be supported to take ownership and lead their own development agenda. In addition, it was incumbent on the global community to make sure that there was equity in the global trading system to ensure that trading was fair.

91. The representative of Finland said that the Aid-for-Trade initiative, launched only four years ago, had been a remarkable success, as testified by the present Global Review meeting. However, the Review also showed that much remained to be done. Finland concurred with the conclusions of the Aid-for-Trade at a Glance 2009 report that maintaining the momentum required reinforcing the local and regional dimensions of the initiative. Aid-for-Trade dialogue should be conducted at the local level and should be fully integrated into the existing aid architecture and donor-partner coordination mechanisms at the country level. Creating new bureaucratic structures in the name of Aid for Trade should be avoided. The economic consequences of the financial crisis provided a challenge to maintain the positive trend in Aid-for-Trade funding, but it was equally important to make the money work for the intended purpose. Aid for Trade had to work on the ground and had to be seen to work. One of the key questions was how public assistance and public policies could induce private sector development and enhance competitiveness at the company level, creating new jobs and reducing poverty. It was therefore not only inputs that mattered (i.e. the money invested in Aid-for-Trade purposes) but what was crucial was output (i.e. the results that made a difference on the ground). In this context, broad ownership and wide participation of key stakeholders were vital for success. Bilateral donors, partner governments, private sector organizations and other non-state actors must be able to work in a productive partnership. The initiative must not become an excessively agency-driven administrative process without the participation of real business.

92. Finland wished to congratulate the WTO Secretariat for the work it had done jointly with the OECD and other international organizations and believed that the WTO should continue as an active promoter of Aid for Trade. Periodic global reviews were a useful way of taking stock of progress achieved. As Aid for Trade developed further, it was important that the agencies involved continued to focus on their core competencies. At the same time, organizations should not be burdened with excessive oversight responsibilities. Finland believed that the results of country-level activities could be usefully fed into the global review meetings in the form of case studies and best practice.

93. In conclusion, he informed that, in September 2008, Finland had launched a national Aid-for-Trade Action Plan which built on the joint EU Aid-for-Trade strategy. Implementation of the Finnish Action Plan was well underway and focused on areas in which it had expertise to offer – such as information society, forestry, agriculture, as well as energy and environment. Integrating developing countries better into the global trading system and helping them to benefit from global trade was now more important than ever and Finland would remain a committed partner in Aid for Trade to make this happen.

94. The representative of Brazil said he wished to offer some comments on the way forward, based on the experiences that Brazil had been accumulating since the First Global Review in 2007. He said that substantial progress had undoubtedly been made over the past two years in efforts to monitor Aid for Trade. The much higher response rate from partner countries to the OECD-WTO Aid-for-Trade questionnaire was a strong indicator that partners were more engaged and that raising the profile of Aid for Trade was being successful. Nevertheless, as the Aid-for-Trade at a Glance 2009 report pointed out, only 52 per cent of countries had indicated that they had fully mainstreamed trade in their national development plans. It was clear to Brazil that further engagement was not only needed in-country but also in Geneva. Members' more active participation throughout the whole process of the monitoring exercise could be achieved if delegations, in particular those from developing countries and LDCs, had the opportunity to closely follow-up the quantitative and qualitative analysis of Aid-for-Trade flows. Brazil considered that enhanced transparency and debate,

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including with regard to methodological issues, might help to improve the quality of the monitoring mechanism. Further technical discussion could have proved efficient so as to avoid, for instance, the difficulties that partner countries had to compare the CRS/OECD proxies with their own data. The ongoing debate on aid effectiveness could not be tackled without an in-depth understanding of the basis of the monitoring exercise, in order to improve its credibility.

95. Turning to the regional level aspect of Aid for Trade, he expressed Brazil's appreciation for the treatment given to South-South cooperation under Chapter 5 – Regional Dimension – of the Aid-for-Trade at a Glance 2009 report. Based on a specific OECD-designed questionnaire on South-South cooperation, four delegations had provided information on their South-South cooperation activities. Since the First Global Review, Brazil and other like-minded delegations had been trying to clarify the distinctiveness of South-South cooperation. The creation of a specific questionnaire on South-South cooperation constituted a remarkable improvement for the Second Global Review. In addition, Brazil and four other developing-country members (Argentina, Chile, China and India) had had the opportunity to present their views and goals regarding South-South cooperation. Brazil wished to encourage other developing countries to engage in South-South partnerships. Developing countries faced similar technological, economic, social and political difficulties and were in a better position to assist each other in a cost effective manner. South-South cooperation was a growing trend and a priority for the Brazilian Government. In his speeches, President Lula da Silva often made reference to it as a possible way for developing countries to overcome hunger and poverty. Even though Brazil was somewhat constrained by resource-availability, it looked forward to increasingly establishing partnerships that could assist to further integrate developing countries in world trade.

96. Finally, regarding the future level of Aid-for-Trade flows, he said that, as the Aid-for-Trade at a Glance 2009 report had concluded, donors had met, or were on their way to meet, the 2005 Hong Kong pledges, which was to be duly praised. Brazil was also pleased to note that there was a tendency among donors to scale up their commitments in the short term. However, as a result of the credit crunch, the economic crisis and the recent adoption of trade distorting measures by some members, it should not be forgotten that developing countries' needs had also increased since 2008. Against this backdrop, Aid for Trade could be an important countercyclical measure, but needed to be understood in the context of a broader development agenda. Aid for Trade alone could not change the inequalities of the multilateral trading system. Concluding the Doha Round, having development at its centre, with development-oriented rules and trade liberalization that took into account both the sensitivities and the interests of developing and least-developed countries would, together with Aid for Trade, deliver the results.

97. The representative of Argentina congratulated the WTO and the entire team for the excellent way in which the Second Global Review had been organized. Argentina was also grateful to the OECD for publishing the second Aid-for-Trade at a Glance 2009 report and to the panellists who had participated in the eight working sessions. During the two-day discussion, a series of very relevant issues had arisen which would assist in preparing a roadmap for 2009/2010. In this regard, Argentina wished to highlight the following three questions. First, in line with the slogan of the Second Global Review – Maintaining Momentum – future work should include how Aid for Trade could contribute to the development of productive capacity and the strengthening of the private sector, in particular for the benefit of small- and medium-sized enterprises. This should help them better insert themselves into regional and worldwide markets, given the current worldwide economic and trade stagnation. Second, as the WTO Director-General had mentioned at the beginning of the Review, Argentina also believed that the regional dimension was very important and that it should be included in the future work of Aid for Trade. The regional implementation experiences described in relation to the North-South Corridor in Africa, Meso-America and ESA in Latin America and the Mekong-Delta in Asia were excellent examples of what Aid for Trade could contribute. This regional component therefore needed to be included in the 2009/2010 Aid-for-Trade roadmap. In conclusion, he said that Argentina

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appreciated the opportunity to have a debate on South-South cooperation and urged that that also be included in the 2009/2010 roadmap.

98. The representative of Lesotho said that he wished to associate Lesotho with the statements made on behalf of the LDC, African and LLDC Groups. It was gratifying to note that Aid for Trade was progressing steadily and perhaps gathering momentum and Lesotho hoped that this would be the case even in light of the current financial and economic crisis. Trade would certainly contribute in some measure to recovery from the current crisis.

99. For developing countries, addressing the supply-side constraints was key to being fully integrated into the multilateral trading system and Lesotho hoped that Aid-for-Trade resources would be additional and increased even in the midst of the current financial and economic crisis. Conditionality should be minimal and easy to satisfy, but it would be preferable to have no conditionality at all. He said that ODA had been highly concentrated and it was Lesotho's hope that, in contrast, Aid for Trade would be more evenly spread and that there would be no marginalization, especially in regional Aid-for-Trade projects. Physical and institutional infrastructure was not sufficient, especially for the LLDCs, and even trade facilitation, although a necessary condition, would not be enough. A one-stop border was not the answer to everything and it was important to take into account the positive or negative attitude of transit countries. Transit countries should desist from causing uncalled for delays to goods in transit; every day of delay meant eroded competitiveness of the exporting landlocked countries.

100. Referring to the soon to be launched EIF, he said that more resources were required for the 49 least-development countries and appealed to the cooperating partners and to potential cooperating development partners to contribute handsomely to the EIF to enable it to perform its primary function which was to: (i) offer trade-related training and technical assistance; (ii) mainstream trade in LDC's national policies; and (iii) integrate LDC's trade into the multilateral trading system. He concluded by saying that gender, youth and environment should be factored in to the design and implementation of Aid-for-Trade projects.

101. The representative of Pakistan complimented the Director-General and his team for the high level of participation at the Second Global Review. Pakistan also welcomed the initiative to highlight the need of Aid for Trade and capital inflow to developing and LDC countries. She said the timing of the Second Global Review was most appropriate. The fact that world trade faced a nine  per cent decline and world GDP was expected to decline by almost three per cent, meant there was a need for purposeful engagement between developed and developing countries that strengthened capacities around the globe. Developing countries, in particular, were dependent on remittances and focus should be made on requirements and opportunities for effectively maintaining inflow of FDI and tourism which were especially vulnerable to high instances of poverty.

102. As regards Pakistan's trade policy, this was well integrated in the overall development and growth strategy of Pakistan's economy. The Second Global Review provided an opportunity to partner countries for effective self assessment at the national level and for identifying the gaps between needs and resources at the global level. However, a closer look at the analysis of responses suggested that more work was needed to clarify the definition of Aid for Trade. Countries had to make an extra effort to reconcile the OECD CRS data with national data. In this regard, the main problem faced by several countries was their inability to identify the trade component of each development project. The current exercise had also helped national governments to focus on their own aid information management systems. The exercise had definitely been useful in highlighting the importance of overall aid, in general, and Aid for Trade, in particular. It had identified several gaps, and Pakistan hoped that the exercise would lead to greater flow of resources to developing countries and LDCs.

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103. Pakistan welcomed the formation of regional technical groups and was a member of the Asia-Pacific Regional Technical Group (RTG). As such, Pakistan would continue to participate effectively in the RTG process not only through its Geneva office but also through its active participation at the regional level. The Second Global Review had highlighted the importance of areas such as availability of trade finance to small- and medium-sized enterprises, infrastructure development needs, importance of South-South cooperation and public-private partnership. Future work might focus more on case-by-case and county-by-country identification of impediments that were presently preventing the benefits of trade being fully realized. Results had to be seen on a case-by-case basis, but countries could learn from best practices and innovative approaches for public-private partnership. Aid for Trade needed to have identifiable targets and regional as well as country-specific monitoring indicators. The WTO's involvement in this area had not only brought it under a spotlight but would be helpful in removing supply-side constraints. Pakistan hoped that once the Doha Round was finalized countries would be in a better position to take advantage of the emerging opportunities. In conclusion, Pakistan hoped that the exercise would ultimately lead to greater ownership at the local level which it considered to be key for the success of all development initiatives.

104. The representative of Singapore said that, against the sombre backdrop of the economic crisis, the Aid-for-Trade initiative had become more relevant than ever, not only in mitigating the negative impact of the downturn on LDCs, but, more importantly, in helping position those countries for future recovery through long-term development and structural adjustments to address their underlying economic vulnerabilities. She said that, over the last few years, the Aid-for-Trade initiative had succeeded in raising awareness about the issue and in turning Aid for Trade into an essential component of development assistance. It had also achieved, in a short time, remarkable success in increasing Aid-for-Trade resources and effectiveness in delivery on the part of the donors, as well as fuller engagement from partner countries in their own Aid-for-Trade and development strategies. The discussions over the past two days had served to emphasize the importance of maintaining this momentum. Increases in concessional Aid for Trade had to be maintained, especially during the current difficult economic period. There had to be sustained engagement and commitment from all stakeholders – from the partner countries themselves to further mainstream trade into their national development strategies and to take greater ownership of their Aid-for-Trade activities, and from private sector partners in areas such as trade finance and investment.

105. The Session on South-South Cooperation Experiences had been particularly interesting. In the last few years, all had witnessed the economic transformation of developing countries such as Brazil, China and India. Like others, Singapore was pleased to note that these countries were playing an increasingly important role in supporting the Aid-for-Trade initiative. As a small island state with no natural resources, Singapore had benefited immensely from the technical assistance provided in its early years of independence. The knowledge shared, together with the close cooperation of its trading partners, had enabled Singapore to develop its trade capacity so that it could compete effectively in global markets. In turn, Singapore believed in sharing its knowledge and experience with fellow developing countries, and it was this belief that shaped Singapore's commitment to the Aid-for-Trade initiative.

106. Singapore supported the Aid-for-Trade initiative through various means, the most significant of which was the Singapore Cooperation Programme (SCP), established in 1992 to provide technical assistance to other developing countries. As much as 80 per cent of the SCP activities were targeted, directly or otherwise, at enhancing the economic capacity of recipient countries to enable them to participate more effectively in the multilateral trading system. In response to the current economic climate, Singapore had customized programmes to assist regional countries with policy responses to the global economic crisis. Intra- and inter-regional trade, and boosting domestic demand, were important aspects of a long-term solution. One of the key pillars of the SCP was the Memorandum of Understanding with the WTO, signed in 1996, under which Singapore jointly organized trade capacity-building activities for other developing countries in the region and beyond.

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107. Singapore was also a key supporter of greater regional integration as it saw this as an essential means of facilitating and integrating the lesser developed countries into the regional and global markets. In this regard, Singapore was pleased to see that the regional dimension of Aid for Trade was gaining momentum and that there was growing recognition of the role regional economic integration could play as a catalyst for collective regional economic growth. She noted, with great interest, the example provided by President Kuroda of the AsDB on how economic corridors created under the Greater Mekong sub-Regional Project had reduced transport time on one route in the Lao PDR from three days to four hours. This, together with the other case studies discussed in Session  6, were examples of the immense potential benefits accruable through improving cross-border infrastructure, and of how regional integration could play a critical role in strengthening the competitiveness of developing countries in the multilateral trading system. It was with this in mind that Singapore focused a large part of its technical assistance activities on the region.

108. The initiative for ASEAN Integration, launched in 2000, was a key initiative with the aim of narrowing the development gap in ASEAN through education and human capacity building. Singapore had witnessed how economic integration and regional cooperation could foster growth and development and would like to do what it could within its means to ensure that ASEAN prospered as a region.

109. To conclude, she said that Singapore remained a keen supporter of the Aid-for-Trade initiative and was committed to helping fellow developing countries develop their trade potential. The Second Global Review had been very useful, especially in pin-pointing areas where improvements could be made and in highlighting concrete steps to maintain the momentum of the important initiative. Special credit should be given to both the WTO and the OECD for painstakingly preparing the partner country fact sheets which would go a long way in facilitating greater coordination between donors and partner countries, and to promoting greater accountability as well as more effective monitoring. Such feedback and recommendations would surely assist in developing a better approach towards operationalizing Aid for Trade to maximize its effectiveness. Singapore, for its part, would consider how it could improve upon its own bilateral and regional Aid-for-Trade programmes to better complement and support the initiative.

110. The representative of Japan, congratulated the WTO Director-General and his staff for the success of the Second Global Review meeting. Japan wished to share what it thought would be a way forward based on the very good achievement made through the present Global Review. First, Japan welcomed those donors who had already announced new contributions and invited other donors to do likewise. Second, regarding the regional dimension, LDCs were again playing an indispensable role and Japan expected these countries to continue in the same vein. LDCs should take full advantage of the tangible results of regional coordination such as the 17-year old GMS Corridor or the new North-South Corridor which had the potential of keeping a regional-approach momentum. Third, on private- public partnership, he said that the public sector should take the lead, but that this lead should be accompanied by private sector involvement such as FDI and with input of aid flows that could lead to real output.

111. In conclusion, he said that a successful outcome of the Doha Round and the importance of the conclusion of the DDA could not be emphasized enough. Japan stressed that the synergy between the conclusion of the Doha Round and the promotion of Aid for Trade would enable the current turmoil to be overcome and would result in growth getting back on track. In the area of Aid for Trade, Japan, for its part, would continue to implement its recently announced contribution of US$12 billion over the next three years, without sacrificing its aid to other areas such as health and education.

112. The representative of Nepal joined previous speakers in congratulating the WTO Director-General and his team for successfully organizing the Second Global Review of Aid for Trade. Nepal appreciated, and supported, the ideas put forward by Zimbabwe, Barbados, and

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Paraguay on, respectively, LDC, SVE, and LLDC issues. Nepal was also a landlocked developing country located in South Asia and, like other LDCs and LLDCs, poverty reduction remained an overarching goal in its national development agenda. These were duly reflected in Nepal's PRSP. Poverty reduction was also covered by the integrated framework process and, in the context of the Aid-for-Trade initiatives, the aim was to achieve poverty reduction through trade-related growth. However, trade growth did not automatically guarantee poverty reduction. For this to happen, a suitable and enabling environment had to be created. In this respect, the trade development agenda needed to be embedded with a production process that had linkages at, for example, the level of farmers, small growers and producers. In order to deliver on trade benefits, there was a need to focus on sectors – for example, labour – that could impact production. Aid for Trade should therefore focus on improving supply-side capacity of LDCs by focusing on development infrastructure, product development and provision of trade support synergies such as SPS, TBT and trade facilitation measures. And, in order to realize the quick win outcome of Aid-for-Trade, focus should therefore be given to development of product needs targeting this market. With this approach, other related services and development activities could be covered by product development activities that would thus help to benefit the economic agenda and to achieve poverty reduction and, ultimately, the MDGs. Belize had been cited as an example of this approach where exports of papaya had been revived by improving product standards through interventions on insect pest elimination. This had also helped in establishing a good supply chain to the US market. This example should be replicated.

113. In conclusion, he said that focused attention should be given for the development of quality standards, product diversifications, and commercial production of specific products with potential and, from this, that trade facilitation and market access issues should follow. In this context, the Aid-for-Trade initiative should also consider implementing investment projects and should dispense with the traditional idea of just implementing technical assistance projects that had failed to bring any substantial move to the trade development agenda.

114. The representative of Switzerland said that, after having listened to the substantive debate, he wished to first of all recall the message given the previous day regarding the way forward. That message was very clearly implementation, and the answer was, yes, implementation was possible. Second, Aid for Trade was not a stand-alone enterprise. It would gain an enormous significance with the conclusion of the Doha Round. For instance, it would be essential to adopt the results of NAMA where the strong increase of South-South trade could be observed. In order for this to be optimized, adequate Aid-for-Trade measures would be required. Third, Switzerland had always been supportive in the Doha Round of solutions which were adequate for specific situations. As a landlocked country, Switzerland understood and supported the LLDC initiative. Finally, he expressed thanks to the WTO Director-General and his team for the successful organization of the Second Global Review.

115. The representative of the United Kingdom echoed the thanks that had been expressed to the WTO Director-General and his team for delivering such an interesting Review. He said it was evident that over the last few years enormous progress had been made in moving forward with the Aid-for-Trade agenda. The United Kingdom had been, and would continue to be, very active in the area of Aid for Trade and would try to push forward on new ideas and new approaches. The previous day the UK had launched a new White Paper in which it committed to spend at least £1 billion a year over the next three years to support trade and growth. A key part of this strategy would be in the UK's support of Aid for Trade. That support included UK's bilateral and multilateral contributions, but was a real step forward from the commitments made up to 2010 which the UK was very much on track to deliver as well. Within that commitment a specific focus would be placed on a number of areas, including regional integration which the UK saw as critical and which was a key theme of the White Paper, particularly in respect of Africa. A large contribution would therefore go towards building on progress that had already been seen, for example, in areas such as the North-South Corridor. He reiterated the UK's support to trade finance and said that the White Paper also discussed how the UK wanted to respond to the financial crisis and the impact on the poorest countries. The UK's

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contribution towards trade finance was one example of that and it would be looking to drive forward further contributions around that as part of the ongoing G20 process.

116. Capturing some of the comments that had been made regarding the future challenges around Aid for Trade and the way forward, he said "DRIVE" seemed to be an appropriate acronym. "D" was for delivery. It was clear that much progress had been made and many examples of success had been given and it was now time to move from plans to action and focus on implementation. Key themes that had come out of the two-day discussions where more work was needed included: mainstreaming; trade-related capacity building; regional integration, with a very strong focus on infrastructure and infrastructure development; trade facilitation, involving the private sector with a focus particularly on market development and public-private partnerships; trade finance and issues around supporting countries through the downturn in accessing trade finance; and adjustment questions. Some interesting examples had emerged over the last two days of how to do this work well and that needed to be built on and driven forward to deliver. "R" was for results. Outcomes had been talked about but the poverty impact and, as Norway had mentioned, the gender impact from Aid for Trade needed to be visible. A good monitoring and evaluation system was needed and these systems needed to be embedded through the national processes in country. A lot of work had been done on this and there was probably more to do. The UK, for example, would be committing to build a very evidence-based approach to Aid for Trade. "IV" was for innovation. Innovation meant new ideas and approaches, working differently, engaging partners differently and, in particular, building on ideas such as the North-South Corridor where people really pulled together to work in very different ways. And, finally, "E" for engagement. This meant building new and different partnerships. The WTO had already shown enormous leadership around the Aid-for-Trade agenda and should continue to play that leadership role. Other stakeholders, including bilateral donors and those who delivered much of the Aid for Trade, needed to be brought more into the debate about what worked. Different levels and ways of working, both within Geneva and at the regional and country levels, were needed.

117. In conclusion, he said that the Second Global Review had been a great success and all should be congratulated on what had been achieved. The emerging results and good practice would now have to be built on. In this regard, the UK – and, he was sure, other bilateral donors, too - were very keen to continue discussions on the roadmap and the way forward and looked forward to delivery, results, innovation and effective engagement as the Aid-for-Trade initiative moved forward.

118. The Chairman thanked all the speakers for their interventions and for the excellent and interesting comments that had been made on the challenges that lay ahead.

XI. SESSION 10: AID FOR TRADE – LOOKING AHEAD

1. The Director-General said that the previous session had been extremely useful not only with regard to hearing about experiences on how Aid for Trade was working in individual countries, but also with regard to suggestions about the way forward.

2. One key aspect of the dialogue was that it had helped bring the trade practitioners and the development professionals closer. In agricultural development, for example, the aim was to increase the productivity of farmers so they could sell more food products, both domestically and across borders. In infrastructure development, the aim was for those food products to travel along the roads and railways or through the ports and airports which had been built. Clearly, trade impinged on all sectors of the economy; it was not a sector on its own – and it was this realization that was important.

3. This fact also strengthened the case for mainstreaming trade into national development strategies. In the discussion over the last two days, how economic and social benefits could be accrued from trade opening provided trade was mainstreamed had been highlighted. The reality was that trade pervaded the fabric of global society. As UN Secretary-General Ban Ki-moon had said the

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previous day, building more trade capacity was essential because trade could and must be part of efforts to stimulate a recovery. And, as had also been said by one delegation earlier that day, Aid for Trade was now firmly established in the agenda for integrating developing countries into the trading system.

4. The centerpiece of the Second Review had been the joint OECD-WTO Aid for Trade at a Glance 2009 report. This report showed that trade was being prioritized by partner countries in national development strategies; that donors were offering more and better Aid for Trade and that new partners were becoming engaged in South-South cooperation. Furthermore, the increase in allocation to Aid for Trade had been achieved without reducing resources to other development priorities such as health, education or environment. Aid for Trade had grown by ten per cent per year between 2005 and 2007; if non concessional aid from international financial institutions was added to that the figure nearly doubled in value.

5. A message which had come out of the Global Review was the need to refine monitoring in understanding how Aid for Trade was working in tandem with other financial instruments, in particular those offered by the international financial institutions. Not all supply-side or economic infrastructure constraints could or would be addressed through an Aid-for-Trade response. For instance, various examples of how grant financing had been blended with other financing instruments had been provided.

6. He reiterated what he had said in his opening statement, that if Aid for Trade was urgent in 2007, it was essential today. Momentum had to be maintained and commitments met. This implied an on-going role for the monitoring framework which the OECD was constantly refining. It also meant refining methodology and reporting. It was a fact that the activities of South-South partners, which had been reported today, and which were growing in volume and importance, were not captured in the Aid-for-Trade numbers generated by the OECD. This required some attention, since better coordination, which was what one was trying to achieve, was difficult without better information.

7. The three break-out sessions on regional implementation experiences had highlighted the indispensable role of regional partners. Through the work of the bilateral donors, regional development banks, RECs, and regional economic communities, significant progress had been made on implementation. He remained convinced that the progress that had been achieved in strengthening the regional dimension of Aid for Trade needed to be built upon.

8. During the course of that morning's discussion, one had also learnt that Aid for Trade needed 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.

9. Numerous interventions from the floor had further reinforced the message that had been received during the monitoring exercise when 88 replies had been submitted from developing country members. That message was that developing countries were taking ownership of their own initiatives. Indeed, there seemed to be a pent-up demand which was being finally released. This meant that Aid for Trade was maturing. But at the same time Aid for Trade was a long-term endeavour. WTO's partners had reacted well to the lead it had taken and they should not be allowed to define their own roles in this process and to participate further.

10. Aid for Trade was 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 RECs and their member governments, with international financial institutions and donors; and at multilateral level by keeping the spotlight on

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Aid for Trade in the G8 which he would attend the following day, the G20, the annual meetings of the World Bank and the IMF, the annual meetings of the regional development banks, and so on. Now that this momentum had been generated it should be kept up and a common destination agreed on.

11. As to what next, he said that at the 11 June meeting of the Committee on Trade and Development, he had noted that a framework needed to be developed that would allow for a better coordination of efforts, mobilization of additional resources, enhancing political ownership and better prepare the way forward. In his view, there were four very clear objectives which should inform the work going forward.

12. First, he believed that the progress achieved in strengthening the regional dimension of Aid for Trade needed to be built upon. In this respect, regional partners including the development banks and bilateral donors would be relied upon to take the lead in evolving clear and focused regional Aid-for-Trade projects. There was an opportunity to advance the Aid-for-Trade agenda by holding an ECOWAS Aid-for-Trade event in the autumn and he said he would be looking for similar opportunities in other regions. He also noted that the Islamic Development Bank, UNECE and UNDP had already agreed on a roadmap with the economies of Central Asia.

13. Second, he believed that the role and contribution of the private sector in this initiative needed to be enhanced. The private sector session held on the previous day had given much food for thought, particularly as far as the specific challenges of bringing SMEs into the picture was concerned. It had also underlined how imperative it was to respond to the pressing challenge of climate change, which could at the same time be a challenge but also an opportunity to unleash investment opportunity. The same could be said for helping meet international standards as well as increasing access to energy. One suggestion which had 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 cut across a wide range of Aid-for-Trade activities.

14. Third, evaluation work with specific focus on evaluating the impact of Aid for Trade should continue. Aid for Trade should develop as a community of best practice. A first step in this direction was to inventory what was out there. The second was to look at common frameworks. It was also necessary to measure not just inputs and outputs but also tangible outcomes. He strongly believed that as national budgets came under increasing pressure, so efforts to show the value of what was being done with evidence – based on reporting on outcomes – needed to be stepped up. As had been mentioned the previous day by President Kuroda of the Asian Development Bank, in 1997 it had taken three days to pass goods from China to Thailand via Lao PDR; in 2009, this time had been reduced to four hours. If this was not a positive example of Aid for Trade, then what was? In order to move further on this, the WTO would as usual rely heavily on its partners. The WTO itself neither had the mandate, nor the capacity to undertake its own evaluation of Aid for Trade.

15. Lastly, he believed the active mobilization of additional resources needed to be continued in particular from beyond 2010. Donors had already given reasonably clear commitments up to 2010; more clarity was now needed about the post-2010 horizon. Japan had given cause for optimism and the commitment they had offered of US$12 billion over the period 2009-2011 was up US$2 billion in comparison with the commitment they had made for 2006-2008. The announcement made the previous afternoon by Minister Thomas that the UK would spend around £1 billion a year over the next three years to enhance growth and trade in poorer countries was also satisfying. The Netherlands had also indicated its commitment to spend at least €550 million per year on all categories of Aid for Trade and the French delegation had just announced a minimum of €850 million per year from 2010 (a 50 per cent increase as compared to the 2002-2005 benchmark). This was, of course, over and above fulfillment of their existing commitments and he encouraged other Members to follow this lead.

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Mobilizing Aid-for-Trade resources would remain essential to help developing countries be prepared to better exit the crisis, including by encouraging South-South Aid-for-Trade partnerships.

16. These were some ideas which had come from the past two days of discussions; they were not entirely new but, what was more important, was for the Members to now discuss them and turn them into their own work plan. He saw a critical role for the Committee on Trade and Development in ensuring continued success, but it was also important to ensure that the views of the development partners were heard.

17. He believed that all should reflect on what had been said at the Second Global Review and try to come up with a work plan which would give direction and consistency, and which could also be fed into the Ministerial Conference in early December for its possible consideration. In so doing, clarity in approach and commonality in purpose would have been given, all of which were necessary ingredients to maintaining momentum on Aid for Trade.

18. In conclusion, he mentioned that the Second Global Review had taken place in the context of efforts to conclude the Doha Round. As Cambodian Trade Minister Cham Prasidh had said the previous day, "Aid for Trade and the Doha Round were Siamese twins. They could not be separated because they shared one heart."

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ANNEX

Annotated Agenda

SECOND GLOBAL REVIEW OF AID FOR TRADE MAINTAINING MOMENTUM

6 AND 7 JULY 2009ANNOTATED AGENDA

The Second Global Review provides an opportunity to give added impetus to the ambitious mandate on Aid for Trade, agreed at the WTO's Hong Kong Ministerial Conference in 2005, which aims to help developing countries, and the least developed in particular, to build the supply-side capacity and infrastructure they need to take advantage of trade opening and to connect with the global economy.

The Second Global Review will evaluate progress made since the First Review held in November 2007 and scrutinize how Aid for Trade is being operationalized on the ground. Progress in securing additional, predictable financing will be discussed and views exchanged on how aid flows can be maintained against the backdrop of the global recession. Central to this process is the examination of the conclusions from the three-tiered monitoring framework which has been put in place: tracking of Aid-for-Trade flows through the OECD Creditor Reporting System; monitoring of mainstreaming and implementation through self-assessments based on a joint OECD-WTO questionnaire; and establishing the impact of Aid for Trade at a national level through appropriate indicators. The monitoring framework will be complemented with case studies across different regions to disseminate good practices with the underlying aim that Members disseminate them amongst themselves.

Key Objectives:

Moving from commitment to implementation

How is Aid for Trade making good on its promise as the agenda moves from commitment to implementation at multilateral, regional and national level?

Mainstreaming trade in national and regional development strategies

What are the obstacles encountered by partner countries in mainstreaming trade into national and regional development strategies? How can this mainstreaming process be encouraged? How can the Enhanced Integrated Framework (EIF) support this process in Least-Developed Countries (LDCs)?

Sustaining aid flows during the global economic downturn

What impact will the global economic downturn have on Aid-for-Trade flows? How can OECD donors be persuaded to engage long term through additional and predictable financing? What role can emerging South-South partners play in Aid for Trade?

Assessing the effectiveness of Aid for Trade

What conclusions emerge from the monitoring framework for Aid for Trade and how is Aid for Trade working at a thematic level?

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6 JULY GLOBAL REVIEW OF AID FOR TRADEDay 1

CONFERENCE ANNOUNCEMENTS

8.50 a.m. – 9 a.m.

Participants are requested to be present and seated in the meeting room for preliminary announcements.

OPENING ADDRESS

9 a.m. – 9.15 a.m.

Ban Ki-moon, Secretary-General, UN

SESSION 1

AID FOR TRADE: THE GLOBAL OUTLOOK

9.15 a.m. – 9.30 a.m.

Global Aid-for-Trade flows grew in real terms by approximately 20 per cent in 2007 compared to the 2002–2005 baseline period established by the First Global Review. Progress is being made in mainstreaming trade into national and regional development strategies and development co-operation programmes. The spotlight effect is working, but how can this trend be sustained in the context of the current global economic downturn? This first session will highlight key messages on the global Aid-for-Trade outlook from the joint OECD-WTO report "Aid for Trade at a Glance: 2009".

Key questions include:

What trends are emerging in Aid-for-Trade flows and from the self-assessments completed by donors and partners?

What progress is being made in mainstreaming trade into national and regional development strategies and donor development co-operation policies?

Pascal Lamy, Director-General, WTO Angel Gurría, Secretary General, OECD

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SESSION 2

AID FOR TRADE: FROM COMMITMENT TO IMPLEMENTATION

9.30 a.m. – 11 a.m.

Regional Reviews of Aid for Trade were held in 2007 for the Latin America and Caribbean, Asia Pacific and Africa. National and regional Aid-for-Trade Reviews held in 2008 and 2009 have shed further light on the supply-side capacity and infrastructure constraints partner countries face. Significant progress has been made in highlighting the Aid-for-Trade needs of partner countries. This session will address the question of how these needs are being addressed? How is the Aid-for-Trade agenda making good on its promise as it moves from commitment to implementation at multilateral, regional and national level?

After presentations, time will be provided for questions. The session will be chaired by the WTO Director-General, Pascal Lamy.

Key questions include:

What have the review meetings held since 2007 highlighted as the Aid-for-Trade needs of developing countries?

What progress is being made to address the Aid-for-Trade needs of developing countries?

How should the direction and delivery of Aid for Trade adapt to meet short-term crises and long-term challenges?

How can Aid for Trade help sustain the recent growth of developing countries and mitigate the effects of the current global economic downturn?

How is Aid for Trade being mainstreamed into multilateral and regional development strategies policies?

Robert Zoellick, President, World Bank Dominique Strauss-Kahn, Managing Director, IMF Helen Clark, Administrator, UNDP Donald Kaberuka, President, African Development Bank Haruhiko Kuroda, President, Asian Development Bank Thomas Mirow, President, European Bank for Reconstruction and Development Luis Alberto Moreno, President, Inter-American Development Bank Waleed Al-Woheeb, Chief Executive Officer, International Islamic Trade Finance

Corporation

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SESSION 3

AID FOR TRADE: ASSESSING IMPLEMENTATION

11 a.m. – 1 p.m.

This session will provide an opportunity for high level officials from OECD donors, emerging South-South partners and representatives of multilateral and regional organizations to discuss progress in Aid-for-Trade implementation. It will assess the impact of Aid for Trade in improving the trade performance of partner countries, with a particular emphasis on intra-regional trade. The role that Aid for Trade can play in lessening the negative effects of the global economic downturn and laying the foundations for greater integration and competitiveness will also be explored.

The session will be organized as a facilitated discussion moderated by Jon Snow, Channel Four News, United Kingdom and a general question and answer session.

Key questions include:

What impact has Aid for Trade had on the trade performance of developing countries, in particular on intra-regional trade? In what ways could the effectiveness of Aid for Trade be improved? How should Aid for Trade be directed so as to ensure it meets the needs of partner countries?

What is the impact of Aid for Trade and how can it be measured?

What impact is the global economic downturn likely to have on Aid for Trade? What is the global and regional outlook for Aid for Trade?

How can emerging South-South partners become further engaged in Aid for Trade ?

Elizabeth Tankeu, Commissioner for Trade and Industry, African Union Commission Louis Michel, Commissioner, Development and Humanitarian Aid, European Commission Gareth Thomas, Minister of State for International Development, United Kingdom Shintaro Ito, State Secretary for Foreign Affairs, Japan Franklin Moore, Deputy Assistant Administrator, USAID Mohamed Ibn Chambas, President, ECOWAS Commission Abdoulie Janneh, Executive Secretary, United Nations Economic Commission for Africa Kandeh Yumkella, Director General, UNIDO Petko Draganov, Deputy Secretary-General, UNCTAD

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SESSION 4

AID FOR TRADE: PRIVATE SECTOR PARTNERSHIP FOR GROWTH

2.30 p.m. – 4.30 p.m.

Aid for Trade should support national and regional efforts to stimulate sustained long-term economic growth. Integral to that process is the private sector. Partnering with the private sector to create the appropriate conditions and incentives for growth should be a core component of the Aid-for-Trade initiative. Engagement of the private sector in Aid for Trade dialogues at national, regional and global level must be facilitated.

Against the backdrop of the current economic crisis, one area where Aid for Trade can positively engage the private sector is by improving access to finance. The crisis has reduced available liquidity in the banking sector and triggered a reassessment of risk with negative impacts for the private sector in developing countries. Particularly hard hit has been the area of trade finance. Difficulties in trade finance are symptomatic of broader constraints in access to credit for the business sector in developing countries.

The session will be organized as a facilitated discussion moderated by Patricia Francis, Executive Director, International Trade Centre, and a general question and answer session.

Key questions include:

How should the private sector be mainstreamed into national and regional development strategies? How can the private sector voice be heard in Aid-for-Trade dialogues?

What long-term structural measures are needed to improve the access of developing countries to finance, and in particular, trade finance? What is being done in this area as part of the Aid-for-Trade Initiative?

What impact is the crisis having on investment flows to developing countries? How can Aid-for-Trade funding be used to leverage private sector investment?

Jacqueline Cote, Permanent Representative in Geneva, International Chamber of Commerce Peter Jones, Chief Executive Officer, Africa Trade Insurance Agency Toru Masutani, Head of Export Credit Agencies, Commodities and Trade Finance, Structured Finance

Division, Tokyo Mitsubishi Bank Naresh Mehta, Chief Executive Officer, Power Technics, Kenya Vinod Kala, Managing Director, Emergent Ventures India Pvt. Ltd., India Rosa Whitaker, President and Chief Executive Officer, The Whitaker Group Arin Jira, Chairman, ASEAN Business Advisory Council Timothy Turner, Director, Private Sector Operations Department, African Development Bank

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SESSION 5

AID FOR TRADE: MAINSTREAMING TRADE IN NATIONAL AND REGIONAL DEVELOPMENT AND COMPETITIVENESS STRATEGIES

4.30 p.m. – 6.30 p.m.

In line with the Paris Principles on Aid Effectiveness, to be successful, Aid-for-Trade strategies should be country-owned and country-driven. Progress made in mainstreaming trade into national and regional development strategies will be reviewed and the experiences of Members shared. The role of the EIF as a tool for mainstreaming trade in LDCs' development strategies will be highlighted. How donors are integrating trade into their assistance programmes will also be discussed. The session will be organized as a facilitated discussion moderated by Ricardo Meléndez-Ortiz, Chief Executive, International Centre for Trade and Sustainable Development and a general question and answer session.

Key questions include:

What progress is being made in mainstreaming the trade agenda into donor and partner-country policies?

What obstacles must be overcome when integrating trade and competitiveness in national and regional development strategies? How can these obstacles be more systematically addressed?

Liliana Honorio, Coordinator for Cooperation, Ministry of Trade and Tourism, Peru Achike Udenwa, Minister of Commerce and Industry, Nigeria Darlington Mwape, Ambassador, Permanent Representative to the WTO, Permanent Mission of

Zambia, Geneva Cham Prasidh, Senior Minister and Minister of Commerce, Kingdom of Cambodia Dorothy Tembo, Executive Director, Enhanced Integrated Framework Adalbert Tucker, Ambassador for Foreign Trade, Ministry of Foreign Affairs and Foreign Trade,

Belize Paulo Kautoke, Representative to the WTO, Pacific Islands Forum Secretariat, Deputy Permanent

Representative of the Kingdom of Tonga to the WTO Mia Horn af Rantzien, Deputy Director-General, SIDA Johannes Smeets, Deputy Head, International Markets Division, Sustainable Economic Development

Department, Ministry of Foreign Affairs, Netherlands

6.30 p.m. – 8 p.m.

World Economic Forum: Global Trade Enabling Report 2009 Preview

The Global Enabling Trade Report 2009 (http://www.weforum.org/getr) measures and analyses the factors enabling trade in national economies around the world. The Report includes the latest data and rankings of the factors enabling trade in 121 industrialized and emerging economies, as well as the latest thinking and research from international trade experts and industry practitioners.

Welcome remarks: Alejandro Jara, Deputy Director-General, WTO

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Opening remarks: Richard Samans, Managing Director, World Economic Forum

During the preview, the co-editors of the Report, Robert Z. Lawrence from Harvard Kennedy School and Margareta Drzeniek Hanouz from the World Economic Forum, will present key findings. Presentations will be followed by a question and answer session moderated by John Moavenzadeh, Senior Director and Head of Sustainable Mobility and Strategy, World Economic Forum. Journalists will also be invited to participate.

WEF Cocktail Reception

SIDE EVENTS – DAY 1

12 noon – 1 p.m.

Official Launch of the Global Trade Liquidity Program – Room W

12 noon – 3 p.m.

Third Open Day organized by the WTO Institute for Training and Technical Cooperation

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7 JULY GLOBAL REVIEW OF AID FOR TRADE Day 2

SESSION 6

AID FOR TRADE: REGIONAL IMPLEMENTATION EXPERIENCES9 a.m. – 11 a.m.

This session will focus on how in practice the Aid-for-Trade agenda is being implemented across different regions. Positive examples of Aid for Trade in action will be showcased. Each case study will examine how priorities which emerged from the 2007 Regional Reviews of Aid for Trade are being addressed. This session will be organized in parallel break out sessions. Participants in each break out session will be invited to draw conclusions from each case study as to how other constraints might be addressed.

Simultaneous interactive break out sessions with the following themes are envisaged:

COMESA-EAC-SADC North-South Corridor (English/French interpretation) – Room W

Moderator: Jon Snow, Channel Four News, United Kingdom

Darlington Mwape, Ambassador, Permanent Representative to the WTO, Permanent Mission of Zambia, Geneva

Juma Volter Mwapachu, Secretary General, East African Community Barney Curtis, Executive Director, The Federation of East and Southern Africa Road Transport

Associations Nathan Chisimba, President, Chamber of Mines of Zambia Alex Rugamba, Coordinator, Infrastructure Consortium for Africa, African Development Bank Rick Scobey, Acting Director for Regional Integration, Africa Region, World Bank

Greater Mekong Delta sub-region (English/French interpretation) – Room E

Moderator: Ganeshan Wignaraja, Principal Economist, Office of Regional Economic Integration, Asian Development Bank

Cham Prasidh, Senior Minister and Minister of Commerce, Kingdom of Cambodia Arjun Goswami, Head of Regional Cooperation Integration Group, South East Asia

Department, Asian Development Bank, Manila Oudet Souvannavong, Secretary General, GMS-BF Secretariat, Lao PDR Arin Jira, Chairman, ASEAN Business Advisory Council Go Shimada, Director, Trade, Investment and Tourism Division, Industrial Development Department,

JICA Li Guangling, Deputy Director-General, Ministry of Communication, People's Republic of China Phillippe Allen, Minister-Counsellor, Australian Agency for International Development Hervé Gallepe, Manager, Commercial Capacity Development Programme, Agence Française de

Développement

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Infrastructure and Integration Corridors in Latin America (Spanish/English interpretation) – Room D

Moderator: Antoni Estevadeordal, Manager of Integration and Trade, Inter-American Development Bank

Karla González-Carvajal, Minister of Transport, Costa Rica Arturo Barrio, Director General, Mesoamerican Project, Ministry of Foreign Affairs, Mexico Flavio Soares Damico, Minister Counsellor, Deputy Permanent Representative, Permanent Mission of

Brazil, Geneva Esteban Piedrahíta Uribe, Director-General, National Planning Department, Colombia Rodolfo Rieznik, Director, Endesa S.A.

SESSION 7

AID FOR TRADE: ASSESSING IMPACT AND EFFECTIVENESS

11 a.m. – 1 p.m.

This session will focus on discussion of indicators developed to evaluate the impact and effectiveness of Aid for Trade. After an overview of the approach used and a discussion of the initial results, experiences will be presented on tracking the impact of Aid for Trade on the trade performance of individual countries. The session will be organized as a facilitated discussion moderated by Mark Gawn, Counsellor, Permanent Mission of Canada to the WTO and Integrated Framework Board Member, and a general question and answer session.

Key questions include:

What can the indicators tell us about the impact of Aid of Trade on the trade performance of individual countries?

What can the indicators tell us about how Aid for Trade is being directed at the priority needs of partner countries?

How can indicators be designed to evaluate the impact of Aid for Trade at regional level?

How can the use of indicators and monitoring to measure the impact of Aid for Trade be further improved?

Frans Lammersen, Principal Administrator, Poverty Reduction and Growth Division, Development Co-operation Directorate, OECD

Bernard Hoekman, Director, International Trade Department, World Bank Thomas Feidieker, Adviser, Globalisation, Trade and Investment Division, Federal Ministry for

Economic Cooperation and Development, Germany Liselotte Isaksson, Policy Advisor for Trade Development Issues, Directorate General for Development

and Relations with African, Caribbean and Pacific States, European Commission Kate Bird, Research Fellow, Overseas Development Institute Stephen N. Karingi, Chief, Trade and International Negotiations Section, Trade, Finance and Economic

Development Division, UNECA Bansari Nag, Coordinator, Gender and Trade Initiative, India Shamika Sirimanne, Chief, Trade Facilitation Section, Trade and Investment Division, United Nations

Economic and Social Commission for Asia and the Pacific Pradeep Mehta, Secretary General, CUTS, India

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SESSION 8

AID FOR TRADE: SOUTH-SOUTH CO-OPERATION EXPERIENCES

2 p.m. – 3.30 p.m.

This session will focus on the increasingly important role played by South-South partners in Aid for Trade. Five WTO Members (Argentina, Brazil, Chile, China and India) responded to the joint WTO-OECD South-South cooperation questionnaire in 2009. This session will examine South-South cooperation strategies and examine how other South-South partner countries can be encouraged to mainstream Aid for Trade into their co-operation policies. The session will be organized as a facilitated discussion moderated by Valentine Rugwabiza, Deputy-Director General, WTO, and a general question and answer session.

Key questions include:

What lessons can be learnt from Aid for Trade offered by South-South partners?

How can existing traditional donors and regional development institutions support further South-Couth co-operation, notably at regional level, through Aid-for-Trade activities?

How can other South-South partners be encouraged to mainstream Aid for Trade into their development strategies?

Alberto Dumont, Ambassador, Permanent Representative, Permanent Mission of Argentina, Geneva Pedro Luiz Carneiro de Mendonça, Under-Secretary for Economic and Technological Affairs, Ministry

of External Relations, Brazil Chai Xiaolin, Deputy Director-General, Department of International Trade and Economic Affairs,

Ministry of Commerce, People's Republic of China Marcelo García Silva, Head, OECD Department, Directorate-General for International Economic

Affairs, Chile Ujal Singh Bhatia, Ambassador, Permanent Representative to the WTO, Permanent Mission of India to

the WTO, Geneva

SESSION 9

AID FOR TRADE: WAY FORWARD

3.30 p.m. – 5.30 p.m.

This session will be organized as an open session for Members and Observers to make comments and give short statements, including on the way forward. The session will be chaired by Ambassador Servansing, Permanent Mission of Mauritius to the WTO, Chairman of the Committee on Trade and Development.

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SESSION 10

AID FOR TRADE: LOOKING AHEAD

5.30 p.m. – 6 p.m.

Closing remarks: Pascal Lamy, Director-General, WTO

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