Book Discussion: <i>Aid for Trade and Development</i>

Cosponsored by the Woodrow Wilson Center and the International Lawyers and Economists Against Poverty (ILEAP). For more information about ILEAP and additional meeting materials, please click here.

To purchase the book, please navigate to Reiter's Books.

On April 15th, 2008, the Woodrow Wilson Center and the International Lawyers and Economists Against Poverty (ILEAP) co-sponsored a seminar on the recently-published book, Aid for Trade and Development, edited by Dominique Njinkeu, the Executive Director of ILEAP. Njinkeu and five other commentators assessed the issues addressed in the book and surrounding Aid for Trade (AFT) generally: first, a review of developing country and regional experiences under former Aid for Trade plans and, second, an exchange of views on donors' and multinational organizations' respective roles. The sessions were chaired by John Sewell, a senior fellow with the Woodrow Wilson Center.

Njinkeu explained that trade capacity building programs, including those initiated by the World Trade Organization (WTO), have become known as Aid for Trade. The book focuses on the evolution of these programs over time and the potential for their use as a tool for poverty reduction in the future.

He opened his analysis by highlighting the recent limitations and future potential of trade capacity building programs and stressed the need for developing countries to maintain "a sense of ownership and leadership in the program and design process." He recommended that trade and aid specialists should include the Aid for Trade concept as part of the overall discourse on trade and when addressing issues of private sector and cross-border infrastructure development. Moreover, he listed key factors donors must consider to better assist recipient countries, which include: trade-facilitating infrastructure, access to capital, and the costs of doing business. More networking is necessary to involve companies and government ministries in AFT impact assessments. Finally, if Aid for Trade is really to be successful in reducing poverty, more staff and resources are needed.

Carolyn Robert, a Trade and Investment Specialist with the Inter-American Development Bank (IDB), and Michael Finger, Lead Economist for Trade Policy and Resident Scholar at the American Enterprise Institute (AEI), focused on the modalities for designing AFT plans, identifying specifically the requisite actions being undertaken in 2008-09.

Robert presented the role of regional banks in AFT, specifically in Latin American and Caribbean countries. She highlighted the key points that emerged from an IDB high-level regional review in Peru. This meeting produced a consensus on the need for more effective financing; the need to promote public-private partnerships; the need to act regionally, including developing regional financing mechanisms; and a focus on regional priorities. The resulting implementation plan also outlines priority recommendations, such as regional and sub-regional technical reviews and the establishment of an AFT support network in collaboration with the WTO, to help countries map out goals and develop action plans.
In his related commentary, Finger focused on the present status of AFT programs, noting that bureaucracy and transportation costs continue to complicate trade issues in developing countries. One potential solution is to encourage joint ownership of AFT projects with the private sector, a reform some countries are undertaking already with considerable success. Moreover, it would be useful to establish a central agency to distribute AFT money to regions and countries that have identified national priorities. According to Finger, "a lot of what is happening is positive, specifically related to funding amounts and country ownership." However, the question remains on how to these findings and proposals can be incorporated into the broader World Bank framework.

The second session of this discussion focused on the progress in the donor community towards the development of AFT strategies. Ann Tutwiler, the Managing Director of Agricultural Markets in the Global Development Program at the William and Flora Hewlett Foundation, and Bernard Hoekman, a Senior Advisor of the Development Research Group of the World Bank, addressed the AFT concept from the donor perspective.

Tutwiler noted that donors have shifted focus and are currently working on improving market access and developing the supply side of agricultural production in developing countries, rather than pushing solely for reformation of the WTO and developed country farm policies. One priority is increasing the access farmers have to both market information and key farming inputs. Furthermore, donors have learned a great deal about how to finance infrastructure development, in part by focusing on concrete geographic areas and utilizing public-private partnerships so that recipients and governments are included in the planning process. She emphasized that "recipients should be viewed as customers." According to Tutwiler, this "turns the tables a little bit about who is making the decisions" by allowing national governments to set priorities and make plans according to their needs.

Hoekman summarized the efforts of the World Bank on improving trade capacity building programs and emphasized the Bank's ongoing commitment to research into the relationship between trade, growth, and poverty reduction in developing countries. He noted the Bank's continued emphasis on trade facilitation and an increased role in coordinating regional cooperation, but stressed the need for increased monitoring of where funding is going and what impact that funding has. It is important to measure "logistics performance," Hoekman commented, to understand if beneficiary countries are able to use the opportunities and resources currently available to them.

Stephen Lande, President of Manchester Trade LTD and Adjunct Professor at Georgetown University School of Foreign Service, contributed to the discussion on donor behavior with insights into the World Trade Organization (WTO) Uruguay Round and its impact on trade and development. According to Lande, developing countries may not have benefited from these negotiations, in part because they lacked funds for capacity building programs, which would have allowed them to take better advantage of markets access opportunities. For future trade and development talks, Lande conveyed his perspective that the "WTO is not equipped to be a development organization," but it should play a greater role in negotiating, taking into account the need for capacity building programs. He also asserted that donors should minimize the conditions placed on funding, noting the failures of programs by the United States Agency for International Development and the Millennium Challenge Corporation due to too many program constrictions.

Njinkeu closed the session by explaining that "we still need, at an international level, a strong network...to make things happen." He added that a concrete proposal for future action should be brought to country capitals, towards the involvement of governments around the world.

Drafted by Sarah Eversman, STAGE Program
Kent H. Hughes, STAGE Program