Donors, recipients look at effectiveness of ‘aid for trade’

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Two EU Commissioners participated to the Fourth Global Review of Aid for Trade in Geneva yesterday (8 July). The event was aimed at providing an opportunity to donors and to developing countries to look how Aid for Trade (AfT) is helping people across the world to trade and what has been achieved so far.

Andris Piebalgs responsible for Development aid and Karel de Gucht, who holds the Trade portfolio, took part in the event, organised by the World Trade Organisation (WTO).  

Piebalgs told EURACTIV that the meeting was “a key opportunity” for donors and developing countries to come together to look at how Aid for trade is helping people across the world to trade and what has been achieved so far (see background).

“The EU collectively with its member states is the world's largest provider of Aid for Trade”, the Commissioner said.  He added that this year's joint report ‘‘Aid for Trade at a Glance: Connecting to Value Chains’ (from the World Trade Organisation, or WTO, and the Organisation for Economic Cooperation and Development, or OECD) provided evidence that Aid for trade indeed increased trade performance.

“Every euro invested in Aid for trade produces between 8 and 20 euros in additional exports from developing countries,” Piebalgs said.

The EU is also a strong proponent of trade facilitation, within the wider AfT initiative. In 2011, the share of EU and its member country contribution in the global Trade Facilitation accounted for 59% of the total effort. It is estimated that a total of $200 billion (€155 billion) have been mobilised since the inception of AfT in 2005.

A critical view

However, a number of NGOs question the effectiveness of the effort.

Traidcraft, a UK-based NGO fighting poverty through trade, and CAFOD, the official overseas development and relief agency of the Catholic Church in England and Wales, have commissioned a study which looks critically at AfT achievements and formulates recommendations.

The research paper says there is very little information available whether AfT projects and programmes indeed impact on poverty. It says that poverty reduction is only measured at macro-level and in the long-term perspective. In contrast, the impact of concrete projects on poor and excluded groups is typically not assessed, the report says.

The paper recommends more rigourous impact assessments, greater accountability by donors, greater transparency of monitoring information and more independent quality research.

According to the report, the share of AfT of overall Official Development Assistance (ODA) has globally from 26% in 2006-2007 to 35% in 2010. AfT to sub-Saharan Africa has increased the most, compared to other regions, by almost 40%.

The geographic allocation of AfT by different donors differs greatly, the report reveals. For example, the share of UK support for Asia in 2010 was of 38%, compared with only 13% from the European Commission.

The report is critical of the EU decision making process, with too many players involved: Directorate General of EuropeAid, Directorate General for Development and Cooperation DEVCO, Directorate General for Humanitarian Aid and Civil Protection ECHO, and the European External Action Service, who manages the 150 EU delegations worldwide.

It also notes that the EU process of evaluation of projects, which is highly centralised, leaves little room for reflection on local circumstances and for the flexibility in project design.

Background

The Aid for trade (AfT) initiative, launched by the WTO in 2005, helps developing countries to trade. Many developing countries face a range of supply-side and trade-related infrastructure obstacles which constrains their ability to engage in international trade.

Aft provides assistance to developing countries, and especially least developed countries, towards building their physical, human and institutional capacity to trade. This includes overcoming constraints such as lack of productive capacity, excessive red tape or poor infrastructure.

The impact of trade facilitation can be very visible and tangible; it can lower transport costs, shorter queues at the borders, simplified controls and formalities, increase trade opportunities and create new market openings. 

Further Reading

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