WT/COMTD/AFT/W/59  
 
6 November 2015  
(15-5875)  Page: 1/8  
Committee on Trade and Development 
Aid for Trade  Original: English  
 
  SUPPORT TO AID-FOR-TRADE RELATED INITIATIVES 
COMMUNICATION FROM THE INTER- AMERICAN DEVELOPMENT BANK 
 
The following communication, dated 4 November 2015, received from the Inter-American 
Development Bank, is being circulated to delegations for information. 
 
_______________ 
 
 
1  BACKGROUND 
1.1.  In its Sector Strategy to Support Competitive Global and Regional Integration1, the 
Inter-American Development Bank (IaDB) highlighted the importance of supporting integration at 
the regional and sub-regional level.  
1.2.  Furthermore, in its "Update to the Institutional Strategy 2010-2020: Partnering with Latin 
America and the Caribbean to Improve Lives", the IaDB recently reaffirmed its commitment 
adopted by the Board of Governors on 30 March 2015, to work with the region to address three major inter-related development challenges: social exclusion and inequality; low productivity and innovation; and limited economic integration. 
1.3.  The IaDB identified three specific challe nges that Latin America and the Caribbean (LAC) 
should tackle to achieve deeper regional and global productive integration and better connect to international value chains:  
 Implementing and taking advantage of free trade agreements (FTAs) : Despite 
having a wide network of FTAs that connect most LAC countries (about 70 FTAs in force), the lack of harmonization and convergence among these agreements, in 
particular the lack of accumulation of rules of origin, represent important trade costs and 
make it difficult for companies to participate in value chains. Moreover, insufficient resources and capabilities have constraine d the implementation of FTAs, limiting the 
benefits of these agreements. 
 
 Reducing logistics and transport costs:  Today, logistics and transport costs 
represent the main trade barrier in LAC. On average, these costs are three times higher 
than tariffs. This is, in part, the result of insufficient investment in infrastructure (LAC 
invests approximately 2% of its Gross Domestic Product on infrastructure compared to 6-10% in East Asian countries). However, 75% of delays in trade are actually 
attributable to inefficient processes and inadequate border crossings that require much 
more modest investments to reduce the costs of trade than investments in infrastructure.
2 
                                               
1 On March 22, 2011, the Board of Executive Directors of the IaDB approved the Bank's Sector Strategy 
to Support Competitive Global and Regional Integration ( http://www.iadb.org/document.cfm?id=35824823 ). 
The central tenet of the Strategy is that the Bank needs to act simultaneously and in a complementary manner 
on the software (policy and regulato ry frameworks) and the hardware (phy sical integration) of integration, 
ensuring coherence between national and regional interv entions, and leveraging func tional cooperation and the 
production of regional public goods. 
2 UNECE (2013).  WT/COMTD/AFT/W/59 
 
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 Promoting productive integration: Company participation in regional and global 
value chains is central for increasing productivity and generating and sustaining better jobs. According to recent research published by the IaDB Integration & Trade Sector
3, 
currently, half of world trade is in intermediate goods, but the involvement of LAC firms 
is only modest: whereas exports of countries in Southeast Asia or the European Union derive 35-40% of their value from imports from other countries, this figure is only 20% 
for LAC countries. 
 2  IADB SUPPORT TO AID FOR TRADE IN LAC 
2.1.  The Bank offers its LAC clients support through a comprehensive set of instruments including 
grants and loans as well as through applied rese arch, technical support, capacity building and 
policy dialogue. To promote investments in integration and Aid-for-Trade related initiatives, the IaDB provides non-reimbursable funds (grants). 
3  STRATEGIC INITIATIVES 
3.1.  The IaDB has been supporting, both through non-reimbursable technical cooperations and 
loans, integration, and Aid-for-Trade related initiatives in the whole spectrum of the 
software-hardware continuum such as:  
 The Pacific Alliance (PA) , a regional deep integration initiative among Chile, Colombia, 
Mexico, and Peru that since 2011 aims at: (i) building in a participatory and consensual way an area of deep integration to move progressively towards the free movement of 
goods, services, resources and people; (ii) driving further growth, development and 
competitiveness of the economies of its members, focused on achieving greater well-being, overcoming socioeconomic inequality and promoting the social inclusion of its inhabitants; 
and (iii) becoming a platform of political articulation, economic and commercial integration 
and projection to the world, with emphasis on the Asia-Pacific region.
4 
 
 The IaDB has supported the work carried out by the PA High-Level Group and technical 
working groups, as well as a platform to bring best practices in new topics, some of which are not normally part of FTAs. Bank projects have also supported the PA Business Council, a platform for businesses, investors, and trade associations to exchange 
information and promote cooperation. The private sector is a critical stakeholder in 
deepening regional integration; its participative consensus building has facilitated and accelerated the four-nation negotiation processes. With inputs generated by expert 
consultancies, the various sectors identified and evaluated issues, and presented policy 
recommendations for consideration at the Presidential Summits.  
   The IaDB has supported the Caribbean integration through the sub-regional integration 
entities Caribbean Community and Common Ma rket (CARICOM) and Caribbean 
Customs Law Enforcement Council (CLEC)  by training and certifying over 500 trade 
and customs officials on Aid-for-Trade related matters through the Bank's Integration and Trade Capacity Building Program and by supporting the completion of the Caribbean 
Strategic Agenda on Integration (SAI) in 2014, designed to increase capacity and 
knowledge on sustainable regional integration programs and investments. It has been beneficial at creating ownership and buy-in from the region on topics of integration, 
fostering communication and collaboration at  the regional level. Additionally, the 
Caribbean SAI has been instrumental in guiding the development of Country Strategies in Jamaica, Suriname and Trinidad and Tobago, all on track for delivery in 2015, and 
preparation of a trade and trade facilitation loan for the latter. 
 The Initiative for the Integration of Regi onal Infrastructure in South America 
(IIRSA)
5 is a technical forum for South American physical integration to support the 
South American Infrastructure and Planning Council (COSIPLAN), under the Union of South 
                                               
3 Synchronized Factories: Latin America and the Cari bbean in the Era of Glob al Value Chains (Blyde, 
2014), ( https://publications.iadb.org/handle/11319/6668 ). 
4 Source: https://alianzapacifico.net/en/   
5 Source: http://www.iirsa.org/   WT/COMTD/AFT/W/59 
 
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  American Nations (UNASUR) in the planning of regional connectivity infrastructure. IIRSA 
was created to support coordinated intergovernmental actions among 12 South American countries (Argentina, Bolivia, Brazil, Chile, Colombia, Ecuador, Guyana, Paraguay, Peru, 
Suriname, Uruguay, and Venezuela), with the objective of promoting the development of 
transportation, energy, and communications infrastructure through tailored regional 
integration and development hubs.  
 The IaDB, through its Institute for the Integration of Latin America and the Caribbean 
(INTAL), is the Secretariat of the Technical Coordination Committee (CCT, for its Spanish acronym) of IIRSA, and has played an active role in facilitating and supporting the dialogue among the South American Countries concerning physical integration.  
 The IaDB has supported IIRSA since its inception in 2000 through several financial and 
non-financial instruments, which include loans, grants, guarantees, technical support including capacity building on international freight logistics, trade facilitation, and the 
generation of regional public goods on topi cs of transport and logistics, cross-border 
integration, and trade. In 2005, the IaDB created the Fund for the Financing of Technical Cooperation for Initiatives for Regional Infrastructure Integration (FIRII) to 
support the preparation of, inter alia , regional infrastructure integration initiatives and 
the IIRSA portfolio, to reduce non-traditional trade costs. The FIRII has financed studies related to the technical, economic, financial, institutional, and legal feasibility of IIRSA projects.  
 The Mesoamerican Project , an integral initiative with IaDB support that carries out in a 
coordinated manner integration initiatives in the topics of energy, telecommunications, transport and trade facilitation in its economic corridor among 10 countries (Belize, 
Colombia, Costa Rica, the Dominican Republic, El Salvador, Guatemala, Honduras, Mexico, 
Nicaragua, and Panama). Flagship initiatives within the Mesoamerican Project include:  
 The International Network of Mesoamerican Highways (RICAM, for its Spanish 
acronym), extending over 13,132 km and incl uding the Pacific and Atlantic Corridors, 
which constitute the shortest route from Mexico to Panama and is used by 95% of land-based trade in the region.
6 
 The Electrical Interconnection System for Central America (SIEPAC, for its 
Spanish acronym), which creates a regional electric market granting access to affordable and reliable energy sources, benefitting more than 45 million users, having 
seen a reduction of 32.15% in energy prices between June 2014 and June 2015.
7  
 The Central American Telecommunications Network (REDCA, for its Spanish 
acronym), establishing a fibre optic network among the Mesoamerican Project 
countries, allowing for full digital connectivity and improved internet access. 
 The International Transit of Merchandise (TIM, for its Spanish acronym), is an 
electronic system for managing and controlling the movement of goods in transit, managed by the Secretariat for Central American Economic Integration (SIECA, for its 
Spanish acronym). TIM consolidates all information into a single electronic document 
and harmonizes the certification process among various authorities (migration, customs, health and agriculture) of multiple  countries. The system uses the Internet to 
connect all agencies' risk-analysis and cargo-control systems. TIM has considerably 
improved cooperation among Mesoamerican countries, while reducing risk and waiting times. For example, at the El Amatillo border between El Salvador and Honduras, the 
average time for in-transit operations dropped from 62 minutes on average to eight 
minutes.
8 Not only has TIM reduced wasted time, it has optimized revenue collection, 
improved private-sector competitiveness, and has lessened the environmental footprint of transportation services. Over 1. 5 million transits have already taken place. 
TIM also improved fiscal and quasi-fiscal su pervision, traceability and the security of 
transit operations, and allowed border agencies to free up time and resources to focus 
                                               
6 Source: http://www.proyecto mesoamerica.org  
7 Source: http://www.proyecto mesoamerica.org   
8 See testimonial video at: https://www.youtube.com/watch?v =7oxpjtw0IaQ&feature=youtu.be   WT/COMTD/AFT/W/59 
 
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  on the actual shipments taking place and on the management of other core activities. 
In light of its success, TIM is being ex panded to the Andean region through 
South-South cooperation. 
3.2.  In addition to the TIM, being implemen ted in Mesoamerica and introduced in Andean 
countries, the IaDB considers it of utmost importance to provide support to other trade facilitation 
initiatives such as: 
 The Single Window for Foreign Trade  (SW), an integrated system that allows 
companies to use a single electronic channel to complete the paperwork required to 
obtain authorizations to import and export goods thus cutting red tape and reducing costs both for companies and governments. Through grants and loans, the IaDB has supported the introduction and implementation of the SW in several LAC countries 
with very encouraging results.  
 In Peru, the Ministry of Foreign Trade and Tourism (MINCETUR) reported figures 
at the end of 2014 that show a 17% reduction in the time needed to process 
requests compared to 2013. A total of 260 administrative procedures involving 
15 participating agencies were incorporated into the SW, resulting in savings of US$70 per individual transaction and cumulative savings of US$11 million in 
2014 in addition to US$9 million saved in 2013. Peru and the IaDB are now 
working together to expand the SW. In Chile, where the SW has been in operation since 2013, the reduction in processing costs is expected to be 50%. With over 1.4 million commercial transactions per year, savings will be 
substantial. 
 In order to exchange experiences and best practices, 24 LAC countries created 
the Inter-American Network of Single Windows  (RedVUCE, for its Spanish 
acronym). The Bank, with resources from the Aid-for-Trade Fund and the 
Regional Public Goods Initiative, is supporting and enhancing regional SW efforts, in particular to design and implement a pilot for the interoperability of SWs 
between Chile, Colombia, Mexico, and Peru. In a later stage, the pilot may 
include Costa Rica and Panama as observers and candidates to join these four countries in the Pacific Alliance. 
 Authorized Economic Operator (AEO) Programs . The IaDB actively supports the 
system of AEOs, which are win-win partnerships between customs agencies and 
businesses that facilitate the movement of goods while increasing security.  
 An AEO is a business that meets supply-chain security standards and has a solid 
history of customs and tax compliance. Once certified, AEOs receive fast-lane 
priority treatment at border crossings, reduced physical inspections and deferred tax payments.  
 Customs and border agents receive advanced electronic information on 
shipments, and apply a consistent risk-management approach to assess threats, which allows authorities to focus control efforts on high-risk shipments and other cross-border challenges. 
 AEO certification benefits the private sector through reduced transaction costs 
and increased competitiveness, and at the same time reduces opportunities for fraud and corruption. The number of AE O-certified businesses in Mesoamerica 
has grown significantly. Colombia began its AEO program in October 2014. 
 In small economies, the certification program targets large traders with a high 
number of shipments to have short-term impact and create a demonstration 
effect to other firms. 
 Mexico and Korea concluded an AEO Mutual Recognition Agreement (MRA) in 
March 2014 with IaDB support. More recently, an AEO MRA was signed on WT/COMTD/AFT/W/59 
 
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  24 April 2015 between the Dominican Republic and Korea, and negotiations for 
an AEO MRA between Korea and Peru were announced in August 2015. 
 Coordinated Border Management . The IaDB also supports Coordinated Border 
Management (CBM) initiatives which address the question of how border agencies 
can improve effectiveness and efficiency, while balancing competing concerns for 
national security and trade facilitation.   
 The World Customs Organization formulated a variety of instruments and policies 
embodied in the Framework of Standards to Secure and Facilitate Global Trade 
(the SAFE Framework). The fundamental principles of the SAFE Framework are to simplify and standardize customs procedures, and enhance international cooperation on intelligence-driven risk management. CBM is a large package of 
activities aimed at solving strategic and practical challenges through three 
pillars: (i) internal coordination within an agency; (ii) inter-agency coordination among border service agencies; and (iii) international cooperation among 
neighbouring countries, and within regional and multilateral settings.  
 In essence, CBM is an approach to manage borders involving public service 
agencies working across portfolio boundaries in a collaborative and 
interdependent manner to achieve a shared goal, thus providing a cohesive 
government response to the chal lenges of border management.  
 Eventually, CBM will encompass all geographic borders, be they land, air, sea, 
river, or any combination thereof.  
4  APPLIED RESEARCH 
4.1.  The IaDB has embarked on a long-term and wide-ranging research agenda with the goal of 
identifying and measuring the impact of the principal barriers to trade and economic integration for 
LAC. Beginning in 2008, the Bank has published a series of analytically rigorous and policy 
relevant studies of the impact of transportation costs, information constraints, and trade facilitation on LAC's trade performance. Two additi onal reports considered the effect of regulatory 
overlap – an unintended consequence of the pro liferation of trade agreements since the early 
1990s – and the region's participation in global value chains, the defining trend in 21
st century 
trade. At the same time, the Bank has continued to monitor and analyse traditional trade costs such as tariffs, which remain considerable barriers to trade for certain countries and sectors 
despite the region's broad movement towards liberalization over the past two decades. 
 "Simply put, tariffs, and other trade policy measures, are no longer the largest barrier to 
trade for LAC. The measures that will yield the greatest trade gains include investing in 
well-targeted export promotion to overcome information costs; improving physical 
infrastructure, port efficiency, and transportation services to bring down transport costs; upgrading customs facilities and processes; and working towards the convergence of 
existing FTAs. These policies will also address the most important constraints to LAC's 
participation in global value chains."
9 
 
 Regulatory costs . The 2009 report "Bridging Regional Trade Agreements in the 
Americas"10 describes the dimension and magnitude of costs arising from 
overlapping trade rules and argues that the best strategy to address the issue is working towards the convergence of existing agreements. 
 Information costs . The 2010 report "Odyssey in International Markets"
11 used 
firm-level data to better understand how, why, and under what conditions trade promotion programs increase exports and to analyse the impact of Trade 
Promotion Organizations in LAC. 
                                               
9 "Bringing down the barriers: IDB research on trade costs in Latin America and the Caribbean" (Kahn, 
Estevadeordal and Moreira, 2015). https://publications.iadb.org/handle/11319/6980  
10 https://publications.iadb.org/handle/11319/255   
11 https://publications.iadb.org/handle/11319/259   WT/COMTD/AFT/W/59 
 
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   Transportation costs . Two flagship reports, "Unclogging the Arteries"12 (2008) 
and "Too Far to Export"13 (2013), provide systematic evidence on the causes and 
consequences of transportation costs for the region's trade flows. Drawing on original datasets, the reports make clear that these costs likely represent the 
single most important trade barrier for many firms in the region.  
 Regional and global value chains . The 2014 report "Synchronized Factories: 
Latin America and the Caribbean in the Era of Global Value Chains"
14, examines 
the region's participation in global value chains, and suggests that barriers 
arising from information, transportation, and trade facilitation costs are undermining LAC's ability to tap into this new mode of global trade. 
5  CAPACITY BUILDING 
5.1.  Consistent with its Integration Strategy and more recently with Goal 17 "Strengthen the 
means of implementation and revitalize the Glob al Partnership for Sustainable Development" of 
the UN Sustainable Development Goals, which highli ghts the importance of effective and targeted 
capacity building, the IaDB finances the Capa city Building Program on Integration and Trade
15 to 
transfer highly specialized knowledge, study, and practical applications to the managerial and technical personnel of public and private trade entities to increase the effectiveness of their 
integration agenda.  
5.2.  The Bank's training program responds to th e increasing complexity of trade agreements, of 
foreign trade operations, and of international value chains. It also responds to the need to increase public-sector productivity to address new challenges.  
 Courses cover specialized and up-to-date topics not available elsewhere in academia, 
public or private sectors, and are delivered largely online but face-to-face training is also available for specific trade and trade facilitation topics.  
 Course directors and tutors are subject matter experts with deep theoretical and practical 
knowledge. Also, courses can be delivered in English, Spanish, and Portuguese.  
 Knowledge transfer and capacity building is delivered using state-of-the-art training 
methodologies that are cost-effective and adaptive to working professionals' schedules and 
posts. The four delivery modalities include: 
(1) Online tutored courses  given at national or regional levels are by invitation 
only to the trade-entity heads, and require 15 hours of weekly study over six 
nine-week periods in groups of a maximum of 40 participants. Since its inception 
in 2012, the Program has offered more than 145 courses on 25 topics with 5,300 trained professionals that supported the operational processes of 
integration in the following four broad categories of topics:   
 Innovation in trade policy and trade agreement implementation  
including: 
o Fundamentals of rules of origin 
o Rules of origin, advanced edition 
o Trade Dispute Settlement in the WTO 
o International Trade and Intellectual Property  
o Sanitary and Phytosanitary Measures - SPS 
o Implementation of Trade Agreements 
o South-South Cooperation for Development 
o Competition Policy  
 
 Trade facilitation, se curity and customs , including: 
o Single Window of Foreign Trade – SW  
                                               
12 https://publications.iadb.org/handle/11319/264   
13 https://publications.iadb.org/handle/11319/3664?locale-attribute=en    
14 https://publications.iadb.org/handle/11319/6668   
15 http://www.iadb.org/en/indes/integration-and-trade-courses,18710.html   WT/COMTD/AFT/W/59 
 
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  o Authorized Economic Operators – AEO  
o International Transit of Merchandise – TIM  
o Coordinated Border Management - CBM 
o Customs Risk Management 
o Customs and Strategic Planning 
o Customs Management and Leadership 
 
 Export promotion and investment attraction , including: 
o Internationalization of SMEs in the Food and Service Industries 
o Impact Assessment Tools for Export Promotion and Investment Attraction 
Agencies 
o E-Commerce and Social Media Applications 
 
 Physical infrastructure , including: 
o Broadband as a Catalyst for Economic Development and Social Inclusion 
o Geothermic for Energy Integration 
o Energy Efficiency in the Caribbean 
o Transportation and International Logistics 
 
(2) Face-to-face seminars  and workshops, often coordinated with strategic 
partners (Advisory Centre on WTO Law, World Trade Organization, World 
Customs Organization), have a duration of three days, and are held in LAC cities 
for a maximum of 40 participants. 
(3) Massive open online courses  (MOOCS)  are self-assessed programs, lasting 
up to 20 hours, geared to companies that want to make better use of foreign 
trade tools or gain deeper understanding of  preferential trade regulations, hosted 
at https://connectamericas.com . 
(4) Communities of Practice (COP) , which are virtual networks for peer-to-peer 
collaborative work by trade entities' pr ofessionals who have previously been 
certified in IaDB courses and who wish to remain involved and share information to improve their performance and implementation. COPs are moderated by a 
facilitator with subject matter expertise. To date, ten COP have been established 
on Rules of Origin, e-Commerce, SPS, SW, AEO, CBM, Competition Policy, Trade Facilitation in the Caribbean, etc. 
6  GRANTS & LOANS 
6.1.  The IaDB is conscious of the importance of generating a bankable portfolio of technical 
cooperation projects in support of trade facilitation initiatives in LAC that could leverage national 
investments with multilateral development bank support. The Bank has used mainly two 
multi-donor funds to support the aforementioned Aid-for-Trade related initiatives
16, with more 
than 50 national and regional projects approved for US$34 million: 
 The Aid for Trade (AfT) Fund  established in 2008 with the aim of strengthening 
the capacity of the Bank's borrowing member countries to integrate into the global 
economy and benefit from trade liberalization and access to markets. The AfT Fund was created with contributions from Canada, Chile, Switzerland, and the United 
Kingdom. 
 The Regional Infrastructure Integration Fund (RIIF) , established in 2011 to 
support investments in connectivity and infrastructure that facilitate the safe 
movement of goods and services across bord ers, and reduce cross-border logistics 
costs in LAC. The RIIF was established with contributions from Canada, Colombia, Mexico, Spain, and the United States.  
6.2.  Most projects funded by AfT and RIIF achiev ed significant results, reflecting the benefits of 
close cooperation between the Bank, its clients, and development partners (which include both 
                                               
16 Capacity strengthening in the area of trade facili tation has also received bilateral support from Japan 
and Korea. WT/COMTD/AFT/W/59 
 
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  borrowing and non-borrowing member countries). More importantly, the Funds have allowed for 
grants to be greater aligned with the Bank's Oper ational Program, since projects funded by the AfT 
and RIIF provided key inputs or were used for the preparation of loans, multiplying the return on the initial technical cooperation investment, increasing its impact in client countries and giving 
visibility to donors.  
6.3.  AfT and RIIF technical cooperation projects combined have provided direct support to 
21 lending operations (both approved and pending approval in 2015) for more than 
US$946 million, yielding a ratio of nearly US$30 in vested in loans for every US$1 of technical 
cooperation. These loans cover the spectrum of integration interventions, particularly on issues of trade policy, trade facilitation, and security and logistics, covering the provisions of the WTO Bali Trade Facilitation Agreement: 
 In the  Caribbean , regional AfT and RIIF projects have supported the preparation 
of loans for the design and implementation  of the single window for foreign trade 
in Barbados and Jamaica, customs modernization in Jamaica, and promotion of 
the services sector in Trinidad and Tobago. 
 In Central America , RIIF and AfT support for lending operations has focused on 
promoting foreign trade, competitiveness, and trade liberalization in El Salvador, 
Guatemala, and Panama, and assistance for foreign trade single windows and 
border crossings' modernization in Costa Rica, Honduras, Nicaragua, and Panama. The RIIF has sharpened its focus to the Northern Triangle countries (El Salvador, Guatemala and Honduras), as trade, trade facilitation and security, 
and cross-border connectivity provide an enabling environment for addressing 
many of their current economic, social, and security challenges. 
 In the Andean  region, both Funds have supported loans in the services sector in 
Colombia, competitiveness in Peru, and trade facilitation (single windows and 
border crossings improvements) in Colombia, Ecuador, and Peru. 
 
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