Aid for trade

Origins of aid for trade

The global Aid for Trade Initiative was launched at the 2005 Hong Kong World Trade Organization Ministerial Conference. The Initiative recognised the importance of trade in driving economic growth, and the need to assist developing countries in improving their capacity to trade. It set in motion a two-track process:

  1. donors committed to scale up their aid for trade, but without setting a target, and
  2. the Organisation for Economic Co-operation and Development (OECD) began a Global Aid for Trade Review to be conducted every two years.

Definition of aid for trade

Gaining access to new markets from liberalisation helps boost trade. However, many developing countries, especially least developed countries, are unable to take advantage of this due to “supply-side” constraints. Aid for trade is about addressing these constraints, such as:

The World Trade Organization (WTO) Task Force on Aid for Trade described aid for trade as:

“about assisting developing countries to increase exports of goods and services, to integrate into the multilateral trading system, and to benefit from liberalised trade and increased market access.”

The OECD broadly categorises aid for trade as:

  1. trade policy
  2. economic infrastructure
  3. building productive capacity, and
  4. trade-related adjustment.

Aid for trade activities can vary. For example, Australia has provided aid for trade in the form of:

Australia’s aid for trade

Australia’s aid for trade expenditure in 2013–14 is estimated to be about $630 million or 12.5 per cent of Australia’s total Official Development Assistance. Estimated aid for trade expenditure is based on the World Trade Organization (WTO) definition. Aid for trade largely overlaps with the investment priorities of infrastructure, trade facilitation and agriculture, fisheries and water from DFAT’s new development policy. A small proportion of Australia’s effective governance expenditure is also covered. However, these priorities are broader in scope, including urban development, large water supply infrastructure, rural development and law and justice investments, which are not covered in the WTO definition).

The majority of Australia’s aid for trade is directed towards global or multi-country initiatives (35%), followed by projects in East Asia (31%) and the Pacific including Papua New Guinea (17%). The main types of aid for trade activities are economic infrastructure including transport and storage (42%), building productive capacity including in agriculture (54%), and trade policy and regulation (4%).

Snapshot of Australian aid for trade

Examples of multilateral aid for trade initiatives
Title Description Start Date End Date
WTO Global Trust Fund The Global Trust Fund helps developing countries engage more effectively in multilateral trade negotiations and implement their WTO membership commitments. 2013 2017
Enhanced Integrated Framework (EIF) Australia’s funding helps the EIF identify constraints to trade in Least Developed Countries. Based on this, the funding also assists the EIF to implement capacity building activities and integrate trade into the national policy process. 2013 2015
International Trade Centre (ITC) Australia's contribution to the ITC's Women and Trade Programme funds activities that support the economic empowerment of women in the Pacific Region. 2013 2016
World Intellectual Property Organization through IP Australia This initiative helps developing countries strengthen their intellectual property systems for increased innovation and investment. 2012 2015
Examples of regional aid for trade initiatives
Title Description Start Date End Date
Pacific Horticulture and Agricultural Market Access program (PHAMA) PHAMA assists Samoa, Tonga, Solomon Islands, Vanuatu and Fiji increase their agriculture and horticulture exports, by addressing the quarantine, sanitary, phyto-sanitary and other market access requirements of their trading partners. 2009 2017
Greater Mekong Subregion Trade and Transport Facilitation Australia is helping to streamline border procedures and reduce the time required to process and clear goods through customs in the Greater Mekong Subregion. 2010 2016
ASEAN Australia Development Cooperation Program (AADCP) Phase II AADCP Phase II is an 11 year program that helps ASEAN establish a regional Economic Community by 2015. The program supports improvements in investment, trade in services and consumer protection in the region. 2008 2019
ASEAN Australia New Zealand Free Trade Agreement (AANZFTA) Economic Cooperation Support Program (ECSP) AANZFTA Economic Cooperation Support Program is a 5-year program that helps build the capacity of ASEAN countries to access the benefits of the AANZFTA negotiated in 2010. 2010 2015
Pacific Agreement on Closer Economic Relations (PACER) Plus Support Australian assistance is helping Forum Island Countries to participate and engage effectively in PACER Plus negotiations. 2007 2016
Examples of bilateral aid for trade initiatives
Title Description Start Date End Date
Beyond WTO Phase 2 This program helps Vietnam implement key economic reforms and meet their WTO membership obligations. 2009 2013
Rehabilitation of Railway in Cambodia Australia is a co-financing partner in the restoration of the damaged and underused railway connecting Phnom Penh to Cambodia’s international port in Sihanoukville. 2009 2014
Provincial Road Management Facility (PRMF) PRMF is helping ten provinces in the Philippines to increase economic growth by improving public access to road infrastructure and basic services. 2009 2015
Solomon Islands Biosecurity Development Program Australia is strengthening the country’s agriculture and quarantine services, and improving the country’s market access and trade opportunities. 2013 2016

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