Elmostafa AITAMOR Beirut, 11-12 November 2009 High level Arab experts Meeting on the preparation for the 7th WTO Ministerial Conference Aid for Trade Islamic Development Bank Elmostafa AITAMOR Beirut, 11-12 November 2009

Aid for trade AfT: context and meaning AfT and WTO AfT monitoring framework AfT and global review IDB Group & AfT: contributions and targets AfT & Arab region

Aid for Trade: the context Trade: necessary not sufficient. Associated costs: liberalization incurs adjustment costs: necessary exporting infrastructure, technology and knowledge to meet product standards. Additional costs needed to realise the full benefits of new market opportunities. 1Necessary for sustained industrial devpt…. 2-as resources are moved from 1 sector to 2 in the process of reform, 3- invstmnt infra & insttions & in productive capacity

Aid for Trade: the context Doha Development Round 2001. Trade has the potential to be an engine for growth. But many developing countries face barriers that prevent them from benefiting from the world trading system.

Aid for Trade: the context Some of these barriers are in export markets But internal barriers : can be just as difficult for exporters to overcome. Targeting these “supply-side” constraints is what Aid for Trade is all about. which the Doha Round of multilateral trade negotiations aims to reduce or eliminate. – -inadequate financing, poor infrastructure-

What is Aid for Trade? Aid for Trade is not a new global development fund but part and parcel of normal programmable ODA (grants and concessional loans). There is no new funding mechanism involved. Existing mechanisms will be used by multilateral, regional and bilateral donors to disburse ODA. Aid for Trade is not a substitute, but a complement . for trade opening -necessary and increasingly important

What is Aid for Trade ? Aid for trade involves the flow of development finance from rich to poor countries for the purpose of enhancing the world trading system.

Aid for Trade: coverage Assistance for trade policy and regulation. Improving infrastructure. Building productive capacity. Adjustment assistance to deal with trade liberalization.

Aid for Trade & WTO Aid for Trade initiative launched at Hong Kong (Dec. 2005). Para 57 of the WTO HKMD invited the WTO DG to consult with “… international organisations … with a view to report to the General Council on appropriate mechanisms to ensure additional financial resources for Aid-for-trade, where appropriate, through grants and concessional loans.”

Aid for Trade & WTO 2006: A Task Force to draw up recommendations on how to operationalize Aid for Trade: “demand-side”, the donor “response”, bridging the gap between “demand” and “response”. Recommended 3 levels of tasks by identifying the needs,,,, strengthening the.., regional and global level.

AfT Monitoring Framework Global level : using data compiled by the OECD Donor level : based on self evaluations Country and regional level : based on self assessments To assess whether additional resources are being delivered, to identify where gaps lie, to highlight where improvements should be made, to increase transparency on pledges and disbursements.,,,,,,,, To share best practices across countries, to identify areas for improvement and to increase transparency on pledges and commitments and get finer detail on Aid for Trade coverage. ,,,,,T o provide a focused, on-the-ground perspective on whether needs are being met, resources are being provided, and AfT is effective

AfT Global Review Global review mechanism to monitor periodically what happens at country level and assess progress in the implementation. The first Global Review of Aid for Trade was held in November 2007. The Review emphasized the need to improve monitoring and evaluation, including monitoring impact of AfT.

AfT Global Review : Roadmap Moving from commitment to implementation Reinforce the AfT regional dimension, Maintain momentum on commitments post 2010, Enhance the role of the private sector, Focus attention towards evaluating the impact of AfT interventions. While Mainstreaming trade in national development strategies. Sustaining aid flows during the global economic downturn.

OIC MCs trade 2007 : overall trade of IDB MCs : US$ 2.6 trillion. 2004: 14% (333 billion). 2007: 17% (421 billion). 2015 target: increase intra-OIC trade to 20%. 9%, Share of MCs in world trade from 15% in 2005,,,,

IDB MCs Trade Supply side constraints and obstacles Lack of investment; Poor infrastructure; Infrastructure management; Institutional capacities; Credit availabilities; Costly regulation; tariff and para-tariff obstacles; Administrative procedures and banking; Face enormous trade related challenges, obstacles and constraints mostly on supply side Weak, weak, limited, burdensome,

IDB Group’s main role IDB assist its 56 Member countries to achieve their economic and developmental goals: Poverty reduction; Growth; Economic and social development.

IDB’s trade financing schemes Export Financing Scheme; Import Trade Financing Operations; Islamic Bank’s Portfolio for Investment and Development; Unit Investment Fund; ICD (Private Sector). ICIEC; ITFC (2006); Since its inception, 3 decades ago IDB developed initiatives for trade financing initially through two major…over the years several initiatives and entities were established and engaged in trade financing ICIEC:Isl Corp for Insurnce of invst credit. it provides Shari’ah compliant export credit &reinsurance facilities to exporters, banks, trade financiers and exprt credit agencies.

IDB Group’s Strategic initiatives Task force on raising trade; ITAP (investment promotion Assistance Program); Technical Assistance program for the TNC and TPS-OIC. TPS: trade preferential system

IDB Group’s Road map (2008) Trade financing; Trade promotion; Trade facilitation; Trade capacity development; Promoting and developing strategic commodities originating from MCs. In 2008 IDB adopted a strategy for enhancing intra-OIC trade, it has 5 major business lines

IDB contribution US$ 34 billion: IDB’s trade financing; 2008: US$ 2.5 billion by ITFC; 72 projects for trade promotion and Trade facilitation in 36 MCs; 2008: US$ 347 million approved by ICD. To date ….. 2.5 , 44% for LDC……. ICD : for 33 private sector operations

IDB’s contribution Food crisis: 2008 Jeddah Declaration Initiative: 1.5 billion (a five years assistance package). Strengthens food security and revitalizes the agriculture sector. Financial crisis: scale up its operations, adding US$ 2.5 billion 2009-2011. Includes enhanc access to production inputs, improve infra, strengthen institutions.

IDB targets Food sector support; Focus on infrastructure: transport, communication, energy; Focus on capacity development through south-south cooperation; Co-financing large projects in sub-regions. Trade related infrs is at the heart of IDB assistance…… The group includes Gulf based bilateral and multilateral donors

IDB Group new vision 2009-2011 Five key areas for poverty reduction: Comprehensive human development; Infrastructure development; Regional economic cooperation/integration; Productive capacity development; Private sector development. 5 ares with business and trade development as core elements

IDB & AfT regionally Meeting SPECA region, march 2009, 2010 2010: ESCWA Road Map Arab region priority needs in relevant areas promote & support future AFT debate Contributed to the meeting SPECA: special prog for economies of central asia and afgastan

AfT & Arab Region Assist member countries and donors in surveying AFT Monitor & assess the impact & efficiency of tailored AFT funding on productive capacity & trade performance Continue to provide target-oriented technical assistance for member countries Encourage dialogue between member countries, donors and relevant regional organizations ESCWA coordinate

Thank you for your attention Elmostafa AITOMAR WTO Expert Cooperation Department IDB eaitamor@isdb.org