Aid for Trade (AFT) has been at work for quite some time in Bangladesh. It is an initiative of the World Trade Organistion (WTO) aimed at enhancing developing countries' capacity to promote trade. The assumption behind this is that there are impediments and bottlenecks for trade which the developing countries cannot overcome on their own. Recommendations of the Task Force on AFT made in 2006 outlined six broad categories for interventions. These include trade policy and regulations, trade development, trade-related infrastructure, building productive capacity, trade-related adjustment and other related requirements.
Under the Aid for Trade initiative funds flow through various development partners and multi-lateral institutions. These include bilateral donors such as AusAID, USAID, European Union (EU), Department for International Development Fund (DFID), Canadian International Development Agency (CIDA), Swedish International Development Agency (SIDA), and Japan International Co-Operation Agency (JICA) and multi-lateral institutions like World Bank, Asian Development Bank, International Monetary Fund and international organisations like United Nations Conference on Trade and Development (UNCTAD), World Trade Organisation (WTO), International Trade Commission (ITC), Organisation for Economic Co-Operation and Development (OECD) and Swisscontact. The number of donors for AFT is impressive and wide ranging. Shortage of availability of fund is not likely to hamstring the operation of the programme, one would think. If there is any shortfall in outcome it is probably because delay in implementation or shortage of components of the programme selected by a country.
The AFT initiative emerged in 2005 following the WTO's fifth ministerial meeting in Hong Kong. The WTO ministerial Declaration of 2005 emphasised "AFT should aim to help developing countries, particularly LDCs, to build supply-side capacity and trade-related infrastructure that they need to assist them in order to implement and benefit from WTO agreements and more broadly to expand their trade". According to Article 57 of the Hong Kong Ministerial Declaration, the aim of the AFT package is to help developing countries to build their production capacity and trade-related infrastructure. These would help them implement and benefit from WTO agreements and more broadly to expand their trade. AFT aims at improving market access opportunities for the developing countries, particularly the LDCs (least developed countries).
According to sources in the Ministry of Commerce, Government of Bangladesh, AFT's main goal was to utilise the aid instruments of trade-related technical assistance and capacity-building in order to support economic growth in developing countries. The scope of the programme is a continuing one. The source in the Ministry of Commerce mentioned above which is also responsible for the WTO cell said recently that strengthening of needs assessment at the country and regional level are also required to ensure meaningful donor response regarding AFT. Ted [Technology, Entertainment, Design is a global set of conferences owned by the private non-profit Sapling Foundation, under the slogan "ideas worth spreading"] sources mentioned that support on AFT enabled developing countries to undertake measures effectively on trade opening.
Centre for Policy Dialogue (CPD), Bangladesh's premier think tank, has taken a different take on AFT's contribution to trade promotion of developing countries, particularly Bangladesh. According to it, the AFT programme has not been able to make any significant impact on Bangladesh trade promotion because of the erratic and low flow of funds. Analysing the dataset from 2002 to 2011 CPD has come to the conclusion that AFT has had no impact at the macro level in Bangladesh. It has been pointed out by it that between 2006 and 2011 Bangladesh received about US$ 391 million on average as aid for trade per year against the average annual commitment of US$ 1047 million.
An amount of US$ 391 in technical assistance is not trifling even if it constitutes less than half of the committed amount. If properly utilised the amount should have some impact (as against "no impact" claimed by CPD) on trade promotion in Bangladesh. The amount released cannot, therefore, be held responsible for the limited contribution made towards trade promotion. The shortfall in outcome may be, in all probability, due to inadequate or poor needs assessment. The six broad categories of AFT intervention are like bare bones, they have to be fleshed out with specific programmes of trade promotions. No information or report is available of the assessments made regarding the needs for AFT interventions. Neither is there an evaluation on the success or otherwise of trade opening measures based on AFT interventions. That the strategy for utilisation of AFT funds leaves much to be desired was admitted in the recent presentation on South-South Co-Operation organised by External Affairs Division (ERD). In the presentation it was pointed out that the effectiveness of AFT can be increased if its focus is equally placed on both projects in infrastructures and production capacity and the measures related to trade policy and regulations, especially in the area of trade facilitation.
While the amount of fund released under AFT and its regularity are important, perhaps more important is the need assessment and prioritisation of the interventions required. Promoting production capacity and infrastructure development, being supply side issues, may not receive much assistance under AFT. But streamlining trade policy and regulations, especially trade facilitation, qualifies for its intervention. The Bali Declaration recently succeeded in agreeing on helping developing countries regarding trade facilitation. Bangladesh should plump for it with gusto.
hasnat.hye5@gmail.com
Impact of Aid for Trade
Hasnat Abdul Hye | Published: February 18, 2014 00:00:00 | Updated: November 30, 2024 06:01:00
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