Small, poor, countries can have a hard time engaging with the world trading network.
Their trade related administration often lacks the physical and human capital to facilitate exports or imports of goods at reasonable cost, or to allow effective participation in negotiations with other countries on how trade arrangments should operate.
I've been exploring (intermittently) their problems in participating in trade negotiations in a series of posts (Dipak Patel and Doha, Challenges of WTO Participation, Trade Policy Coordination Failure in Botswana).
Alan Beattie had a column in the Financial Times this past weekend on their difficulties just participating in trade when their administrative infrastructure is problematic. The New Economist caught it: Why trade facilitation matters (April 1). Beattie writes:
Campaigners savage rich governments for failing to treat HIV-positive Africans. Few get excited about computerising the application process for Rwandan export licences. Yet the unglamorous area of "trade facilitation" - streamlining customs and business regulation to give poor countries better access to the markets of Europe, the US, and Japan - is attracting some attention.
Not least because negotiations on the subject are one of the few parts of the Doha round of global trade talks progressing well. But some of the plans require money, which for very poor countries may mean aid. And progress in making aid cohere with trade is slower.
The Beattie column "subscribers only," but the New Economist has a generous extract.
Trade facilitation aims to smooth the administration of trade. One of its components is the provision of financial and technical assistance to poor countries ("aid for trade").
Here's the WTO's trade facilitation page: Trade Facilitation . This leaflet from the International Centre for Trade and Sustainable Development (ICTSD) discusses the state of play in the trade faciliation negotiations on the eve of last December's Hong Kong WTO Ministerial Meeting: Doha Round Briefing Series: Trade Facilitation . Here's a recent (February 2006) article on the status of trade facilitation from the ICTSD newsletter, Bridges: Trade Facilitation Talks Resume With Flurry of New Proposals .
Joe Stiglitz is all in favor of aid for trade, but is concerned with how the commitments are structured and administered: Nobel Laureate Economist Backs Unified, Enforceable “Aid For Trade” Programme . This story also provides information on aid for trade developments since the Hong Kong Ministerial.
Joseph E. Stiglitz, a Professor at Columbia University and Executive Director of the Initiative for Policy Dialogue, said commitments to provide such aid should be included in the outcomes of the current Doha round of international trade negotiations, and should be made binding and enforceable through the World Trade Organization - a controversial step he said was necessary because rich countries have sometimes failed to follow up on previous promises of such aid...
Prof. Stiglitz also recommended the creation of a self-governing Global Trade Facility (GTF) through which aid for trade would be targeted and delivered to developing countries. Such a facility should set aside 16 of the 24 seats on its board for low- and middle-income nations. The GTF could directly bring a charge of non-compliance through the WTO against any industrialized country not meeting its financial commitments, he said. He recommended that programmes under a GTF, if established, should have a high degree of "country ownership" and private-sector involvement...Aid for trade is seen as an important contribution to the development objectives of the Doha round and to achieving progress in the talks. It can be regarded as a "negotiating side payment" through which rich countries offer financial assistance "as a sweetener to keep developing countries at the bargaining table," Prof. Stiglitz said.
But he said its real importance is as a "complement to market access" - that is, as aid to help poor countries overcome the internal difficulties they face in bringing competitive products onto world markets. "Market access is not enough," Prof. Stiglitz said, noting that aid for trade is needed to help developing countries strengthen weak infrastructures, increase supply capacity, meet the high product standards that prevail internationally, overcome poor access to credit, develop good environments for business, expand business knowledge and technology, and design effective trade policies. Trade liberalization also imposes proportionately larger adjustment costs on poor nations than on rich ones, he said.
The World Bank has recently issued a report on the success of its loans for trade assistance. Pablo Halkyard posted here: World Bank aid for trade (Private Sector Development Blog, March 23). Joel Trachtman posted here: World Bank watchdog and trade (International Economic Law and Policy Blog, March 23). Both posts link to the report itself.
revisions 05apr06
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