Published in The Independent on Saturday, 15 February 2014.
No impact of AfT at macro level: Study
Jagaran Chakma
Bangladesh has vast scope for Aid-for-Trade (AfT), which has been quite effective in many respects in helping the country boost development and achieve trade competitiveness globally. Effectiveness of AfT can be increased if its focus is equally placed on both projects in infrastructure and production sectors and the measures related to trade policy and regulations, especially in the area of trade facilitation.
This was pointed out in a presentation regarding South-South Cooperation, organised by the Economic Relations Division (ERD), at the ERD office recently.
However, the Centre for Policy Dialogue (CPD) in its study said AfT, an initiative of the World Trade Organisation (WTO) aimed at enhancing developing countries’ capacity to trade, could not make any significant impact on Bangladesh because of the erratic and low flow of funds.
After examining the dataset from 2002 to 2011, the CPD came to the conclusion that AfT had had no impact at the macro level in Bangladesh.
Between 2006 and 2011, Bangladesh received USD 391.74 million on average as aid for trade per year against the average annual commitment of USD 1,047.99 million.
The AfT initiative emerged in 2005 following the WTO’s fifth ministerial meeting in Hong Kong. The WTO Ministerial Declaration of 2005 asserted, “AfT should aim to help developing countries, particularly LDCs, to build the 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 sources in the commerce ministry, AfT’s main goal was to utilise the aid instruments of trade-related technical assistance and capacity building in order support economic growth in developing countries. That scope is continuing even now.
The aim of the AfT package was — as per Article 57 of the Hong Kong Ministerial Declaration — to help developing countries, particularly less developed countries (LDCs), to build their supply-side capacity and trade-related infrastructure. These would help them implement and benefit from WTO agreements and more broadly to expand trade. AfT aims at improving market access opportunities for the developing countries, particularly the LDCs.
Additional secretary and also director general of the WTO cell of the commerce ministry, Amitava Chakraborty, said strengthening of needs assessment at the country and regional level are required, which would ensure meaningful donor responses for AfT.
Recommendations of the Task force on AfT (WTO, 2006) have outlined six broad categories of AfT interventions. These include trade policy and regulations, trade development, trade-related infrastructure, building productive capacity, trade-related adjustments and other trade-related requirements.
Under the Aid-for-Trade initiative, funds flow through various development partners and organizations. These include bilateral donors, such as AusAid, USAid, European Union (EU), Department for International Development (DFID), CIZ, Canadian International Development Agency (CIDA), Swedish International Development Cooperation Agency (SIDA) and Japan International Cooperation Agency (JICA), international financial institutions, such as the World Bank Group, which include the International Finance Corporation (IFC) and International Monetary Fund (IMF), Asian Development Bank (ADB) and African Development Bank, and international organisations such as United Nations Conference on Trade and Development (UNCTAD), USCAP, Organisation for Economic Co-operation and Development (OECD), World Customs Organization (WCO), WTO, International Trade Commission (ITC) and Swisscontact.
Amitava Chakraborty said AfT support in the developing countries enabled them to embark effectively upon trade opening measures. This, in turn, has helped them attract domestic and foreign investment and thereby stimulate economic growth.