Aid for Trade: Changing Context and World Bank’s Efforts

1. Aid for Trade: Changing Context and World Bank’s Efforts Richard Newfarmer Special Representative to the WTO and UN World Bank Geneva Experts Group Meeting Aid for Trade, WTO Sept 15, 2008

2. Total Aid for Trade Commitments 2002-06 Constant 2005 US$ US$ Billion Aid for Trade -Trade Policy sub-component (right scale) Source: Bank Staff calculations based on OECD, CRS database

3. Total Aid for Trade Commitments 2002-06 Constant 2005 US$ US$ Billion 100 Total aid excluding debt relief 80 60 Sector allocable aid 40 Aid for Trade 20 Source: Bank Staff calculations based on OECD, CRS database

4. Word of caution…increases in aid for trade are not automatic • Aid for trade can only expand if overall development assistance expands – and recent increases in overall aid have stalled • Growth in core development assistance was 4% in real in 2006 v. 10% in 2005 and 5% in 2002-2006 • Global slowdown may put pressure on budgets of OECD donors • Recent food-energy crisis has shifted priorities of Finance ministers in nearly all developing countries…and budget pressures have increased: • Expenditures to support emergency consumption of the poorest • Reductions in tariffs on food imports • Energy costs of government • Rising interest rates • Context is less hospitable… global economy is slowing and collapse of the Doha round will naturally turn attention of policy makers to other issues Challenge is for Trade Ministers is to make aid for trade a national priority as a central part of growth agenda… Challenge for donors is to realize promises of Gleneagles

5. US$ Millions IDA World Bank Group: Aid for Trade Commitments 2002-08 Source: Bank Staff calculations based on World Bank, Business Warehouse database

6. US$ Millions IDA World Bank Group: Aid for Trade Commitments 2002-08 Source: Bank Staff calculations based on World Bank, Business Warehouse database

7. World Bank Group: Aid for Trade Commitments 2002-08 US$ Millions IBRD IDA Source: Bank Staff calculations based on World Bank, Business Warehouse database

8. World Bank Group: Aid for Trade Commitments 2002-08 US$ Millions IFC IBRD IDA Source: Bank Staff calculations based on World Bank, Business Warehouse database

9. Much of Bank trade-related lending goes to Africa– Breakdown by region, IDA and IBRD, 2008 (narrow World Bank definition of trade-related) ECA LCR SAR EAP AFR Source: Bank Staff calculations based on World Bank, Business Warehouse database

10. Project examples… • Transport infrastructure (US$870 m. in FY08) • Central Afric Transport and Transit Facilitation • Mozambique-Malawi Transmission Interconnection • Second Central Transport in Tanzania • Northern Delta Transport Development in Vietnam • Road Reconstruction and Improvement in Honduras • Future projects in the pipeline • Abidjan-Lagos Transportation and Transit Project • Kenya Northern Corridor Supplemental • Ethiopia and Kenya Regional Interconnection Project

11. Aid for trade is more than money: multidimensional • Training: Over FY 2006-07, the WBG held an average of 48 trade-related training courses (around 14,000 participant training days per year), • Technical assistance activities (free-standing): 36 per year in 2006-2007 • Analytical and policy advice (policy notes, country studies, regional studies): 72/year • Guarantees to leverage private finance: • Global Trade Finance Program US$2.5 b. since 2005 in revolving fund to stimulate trade financial flows to developing countries • Provided US$770 million of guarantees in FY07, set to increase to US$1.3 billion in FY08. • 144 banks in 57 developing countries. • Tools, indicators, research: • Logistics Performance Index • World Trade Indicators • Research: Services, poverty reduction, intellectual property

12. www.Worldbank.org/trade

13. Partnerships are integral to nearly all our activities • Trust funds • Standards Development Forum • IF and EIF • Multi-donor Trust Fund • Laos and Cambodia multi-donor trade trust funds • Lending: Cofinancing or Parallel Financing • Development Policy Loan to Mauritius • ADB has asked Bank to finance part of the Trade Faciliation Action Plan in the Greater Mekong Delta • Research, Data and Training • Research with private academics, RDBs, ILEAP, UNECA • Training with WTO, Columbia University • Data efforts with UNCTAD, ITC and WTO

14. Conclusions… • International community is poised to provide more aid for trade, but increasing activities at the country level depends on “effective demand”. • World Bank is ramping up its activities – particularly in trade facilitation and in basic infrastructure. • But those interested in aid for trade are encountering new “head winds”, so we’ll all have to work harder.

15. References World Bank and IMF “Coping with New Strains in the Global Trading System: Doha Round, Food Prices and Aid for Trade” Staff Paper Prepared for the Executive Directors, forthcoming October 2008

16. Aid for Trade: Changing Context and World Bank’s Efforts Richard Newfarmer Special Representative to the WTO and UN World Bank Geneva Experts Group Meeting Aid for Trade, WTO Sept 15, 2008