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  July 7th, 2024 | Written by

WTO’s Okonjo-Iweala Highlights Vital Role of Aid for Trade in Empowering Developing Economies

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Trade presents valuable opportunities for developing economies that must be harnessed, emphasized WTO Director-General Ngozi Okonjo-Iweala during the opening of the 9th Global Review of Aid for Trade on June 26. Over the course of two and a half days, government officials, leaders of international organizations, and trade experts will discuss strategies to better integrate developing economies into global trade. The event also featured the launch of the “Aid for Trade at a Glance 2024,” a co-publication by the WTO and OECD.

Read also: WTO Report Highlights Remarkable Five-Fold Surge in Global Trade Over 28 Years

During the opening session, global leaders reflected on the 18-year history of the Aid for Trade initiative, which has mobilized USD 648 billion in investments since 2006 to help developing economies enhance their participation in global trade. The discussion centered on how the international community can further assist lower-income countries in capitalizing on trade opportunities.

Director-General Okonjo-Iweala noted that the WTO is celebrating its 30th anniversary this year, coinciding with the 80th anniversary of the Bretton Woods Conference that established the General Agreement on Tariffs and Trade (GATT). She highlighted the significant achievements in global trade and economic development over the decades.

“One of the most remarkable changes since 1995 is that trade-enabled growth has lifted over 1.5 billion people out of extreme poverty,” she stated. During this period, low- and middle-income economies nearly doubled their share of global exports from 16.5% to 32.2%, and the percentage of their populations living on less than US$ 2.15 per day dropped from 40% to under 11%.

Despite these advancements, the current global trade landscape faces several challenges. “We are now in troubled times. We see increasing protectionism, the return of industrial policy, and a narrative that casts trade as anti-people and anti-planet. Trade data shows signs of fragmentation, with like-minded countries trading more with each other than with those less aligned,” she explained.

“Just as poor countries left behind during the recent wave of globalization look to benefit from the open, predictable multilateral trading system, they are being told that globalization is over, and they must fend for themselves,” she added. “Aid for Trade remains a vital instrument to help them do just that.”

DG Okonjo-Iweala also stressed the importance of creating an enabling environment for developing economies to leverage trade for growth, job creation, and sustainable development. Key strategies include maintaining open global markets, enhancing Aid for Trade initiatives, supporting green trade policies, and reducing business risks through agreements like the Investment Facilitation for Development Agreement.

OECD Secretary-General Mathias Cormann highlighted the impact of Aid for Trade investments in supporting open markets and a rules-based international trading system. He emphasized the importance of infrastructure development, private finance, and trade facilitation in promoting trade for development and growth. Cormann noted the need for continued efforts to ensure that everyone benefits from global trade. He also mentioned the OECD’s work in promoting high standards and corporate governance in official development assistance.

“Aid for Trade continues to be an effective channel for building synergies between the trade and economic development goals of donor and developing countries. Our latest report shows that in 2022, disbursements and commitments reached a record high of USD 51.1 billion, up 14% from 2021,” Cormann stated.

The newly launched WTO and OECD flagship publication, “Aid for Trade at a Glance,” explores the trade and development priorities of developing economies and tracks the volume and impact of Aid for Trade funding from trading partners.

Kerrie D. Symmonds, Minister of Foreign Affairs of Barbados, highlighted the ongoing relevance of the Aid for Trade initiative in integrating developing economies and least developed countries into the global trading system, reducing trade-related adjustment costs, and enhancing the supply-side capacity of small economies. Symmonds acknowledged the significant progress made but emphasized that challenges, particularly capacity issues, remain.

He proposed key actions, including establishing robust frameworks for effective Aid for Trade implementation, innovative financing mechanisms like the 2022 Bridgetown Initiative for blended financing and sustainability investments, and ensuring the enforcement of the Agreement on Fisheries Subsidies. Symmonds also highlighted a communiqué on fisheries subsidies supported by over 30 WTO members.

European Union Commissioner for International Partnerships Jutta Urpilainen delivered a video statement stressing the urgent need for decisive international action to promote sustainable development amid global crises. “One of the most powerful tools at our disposal is trade,” Urpilainen said, underscoring the role of multilateral cooperation in fostering a more prosperous and inclusive global trading system. She noted that the EU and its member states remain the largest provider of Aid for Trade, contributing over 40% of global aid in recent years.

EU Aid for Trade initiatives focus on capacity-building to meet technical standards, infrastructure development, and the inclusion of women and vulnerable groups in international trade. Additionally, the EU is addressing global crises such as food security by strengthening agricultural value chains and boosting production in response to the war in Ukraine.