WORLD TRADE  
ORGANIZATION  WT/AFT/W/5 
26 April 2006 
 (06-1961) 
Aid for Trade Task Force Original:   English 
  
 
COMMUNICATION FROM THE UNITED NATIONS DEVELOPMENT PROGRAMME 
  
 The following communication, dated 21 April 2006, is being circulated to the Aid for Trade 
Task Force at the request of the United Nations Development Programme. 
 
 
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RESPONSES TO WTO TASK FORCE ON AID FOR TRADE 
  
I. WHAT IS THE CURRENT SCOPE AND CONTENT OF YOUR AID FOR TRADE 
PROGRAMMES?  WHAT ARE THE LESSONS LEARNED? 
1. UNDP's fundamental objective is to support the process of capacity building across a broad 
range of sectors, including trade.  UNDP also has a mandate to promote human development.  UNDP 
senior management has therefore prioritized the stre ngthening of three types of trade and development 
capacities in developing countries:  (i) the capacity  to deal with supply side and other national 
capacity constraints;  (ii) the capacity to negotiate , interpret and implement trade agreements so that 
they enhance poverty reduction and human devel opment outcomes;  and (iii) the capacity to 
mainstream trade policy in national development stra tegies, including, where relevant, PRSPs.  The 
current scope of UNDP work on trade is aimed at supporting these three capacities through a range of interventions at country, regional a nd global levels.  For example, in  regard to mainstreaming trade 
policies into national development plans and/or  PRSPs, UNDP, through the policy advisory activities 
of its network of economic and trade policy advisers, places special emphasis on the dynamic 
relationship between trade, growth  and human development and prio ritizes trade-related measures and 
reforms with higher or positive human developmen t outcomes.  Among the lessons learned include 
the need for country ownership and articulation of  a coherent and well-c oordinated national trade 
strategy with priority on value-added industria l activities.  This also requires strong in-country 
institutional as well as human capacity.  There can be a two-way positive re lationship between human 
development and trade and the objective of trade policy should be to ensure such a virtuous 
relationship. 
II. ARE THERE, IN YOUR VIEW, OUTSTANDING IMPORTANT TRADE-RELATED 
NEEDS THAT ARE NOT MET TODAY? 
2. While there are various bilateral and multilate ral initiatives on trade capacity building (and 
these need to be scaled-up), the fiscal and other adju stment and implementation costs of trade reforms 
and agreements, including the impact of trade liberalization on the poor and an assessment of 
compensation schemes, have not been adequately addressed.  In addition, national and cross-border 
trade-related infrastructure needs of developing countries have not been adequately met so far. WT/AFT/W/5 
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  III. HAS TRADE, AS A VEHICLE TO PROMOTE GROWTH, DEVELOPMENT AND 
POVERTY REDUCTION, BEEN ADEQUA TELY ADDRESSED IN COUNTRIES' 
DEVELOPMENT PLANS AND POVERTY REDUCTION STRATEGIES?  IF NOT, WHAT ARE THE MAIN REASONS AND HOW COULD THIS BE CORRECTED? 
3. In many LDCs and other low-income countri es, this has not happened as confirmed by a 
recent World Bank evaluation.
1  From UNDP's perspective, there have been shortcomings with the 
analytical approach.  The way trade is treated in PRSPs and similar documents is typically limited to 
projections of export and import growth.  But th ere is no follow through on the trade policy measures 
that are supposed to result in the targets set for trade.  This also reflects a more fundamental problem 
– the PRSP macroeconomic framework  is usually designed to respond to  short-term imbalances rather 
than long-term development needs.  In order to mainstream trade into pove rty reduction and national 
development strategies in LDCs, there is a need to  begin with the challenges posed by subsistence 
economic activities, and the opportunities for value-added, industrial strategy and sectoral diversification.  This requires the identification of  key trade policy objectives in the areas of domestic 
industrial strategy.  It also requires that export and import growth in specific sectors and sub-sectors 
are appropriately sequenced and that implementati on is coordinated with other policy areas, e.g., 
macroeconomic, industrial, health  and education, research and development, infrastructure. 
IV. HOW, IN YOUR VIEW, SHOULD TRADE-RELATED NEEDS AND PRIORITIES 
BE IDENTIFIED? 
4. Trade-related needs and priorities can only be identified through a comprehensive analysis 
(diagnosis) of a particular country 's needs and problems.  The Integrated Framework diagnostic trade 
integration  studies (DTIS), if modified to ensure  both greater country ownership and coverage of 
some of the areas identified above, can provide a good example of this kind of work.  Country ownership and broad national stak eholder participation are vital elements of a national trade 
diagnostic process. 
V. IS THE EXISTING SYSTEM OF DELIVERY MECHANISMS FOR AID FOR 
TRADE ADEQUATE?  IF NOT, WHERE ARE THE GAPS, AND WHAT OPTIONS 
MIGHT EXIST TO ADDRESS THESE GAPS? 
5. We have observed that, often, many trade -related technical assistance programmes and 
projects are disconnected from one another as well as from the trade and development strategies and policies undertaken at international and national levels.  Donors are frequently not aware of one 
another's programmes and initiatives in beneficiary count ries.  This is even th e case for many of the 
countries participating in the Integrated Framework – currently the main international initiative to 
coordinate delivery of trade-related support to th e LDCs.  The key instrument for overcoming this 
hurdle is the Paris Declaration which should be mo re consistently applied.  In this context, 
international trade policies and ag reements that distort development outcomes will also need to be 
addressed and phased-out. 
VI. IS THERE A NEED FOR STRENGTHENING MONITORING AND EVALUATION?  
IF YES, HOW CAN THIS BE DONE? 
6. Despite the importance that the international co mmunity has attached to Aid for Trade, there 
is no systematic approach for tracking the effectiv eness of Aid for Trade in beneficiary countries.  
While the WTO/OECD database represents an indisp ensable source of information on Aid for Trade 
flows, it remains essentially an inventory of trad e-related technical assistance and capacity building 
                                                     
 
1 Assessing World Bank Support for Trade, 1987-2004, Independent Evaluation Group, 2006 
(http://www.worldbank.org/leg/).  WT/AFT/W/5 
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  initiatives and falls short of providing an assessment of Aid for Trade quality and effectiveness.  In-
depth country case studies which assess the trends and impact of Aid for Trade are necessary.  There 
is also need for analysis of specific thematic issu es such as the institutional capacity of national trade 
ministries or impact of pro-poor trade policies to enhance understanding of the issues involved in Aid for Trade. 
VII. WHAT SHOULD BE THE ROLE OF THE PRIVATE SECTOR IN IDENTIFYING 
NEEDS AND IN IMPLEMENTING RESPONSES? 
7. The private sector should participate fully in identifying needs and designing, implementing 
and monitoring Aid for Trade interventions.  Private sector initiatives can be beneficial if they are 
properly and adequately regulated.  The role and capac ity of the state in ensuring such regulation will 
be key and will need to be strengt hened in LDCs.  This should be a high priority.  Public-private 
partnerships can also be useful as long as the gove rnment retains its autonomy and exercises proper 
regulation.  Some good practices in terms of privat e sector participation in multi-stakeholder Aid for 
Trade management and monitoring committees can be  found in some of the Integrated Framework 
countries, for example, Cambodia and Mozambique. 
VIII.  HOW SHOULD AID FOR TRADE REINFORCE THE PRINCIPLES OF AID 
EFFECTIVENESS AND COHERENCE, AS AGREED IN THE PARIS DECLARATION AND AS EMBODIED IN INDIVIDUAL POVERTY REDUCTION STRATEGIES?   
8. Aid for Trade can reinforce the principles agreed in the Paris Declaration if it is fully aligned 
with national planning and pove rty reduction processes as a platform for policy coherence, 
coordination and delivery through direct budget support  and/or basket funding arrangements.  Aid for 
Trade should also contain provision to support nati onal capacity building to facilitate and ensure 
stakeholder participa tion and coordination. 
IX. ARE THERE OTHER IMPORTANT GAPS IN THE DELIVERY OF AID FOR 
TRADE? 
9. There should be an enhanced role for regional development banks in the delivery of trade 
capacity support, especially in the area of region al cross-border initiatives through innovative 'new 
public finance' delivery mechanisms which need to be prioritized because of their relative neglect so 
far.  At the same time, in-country capacity to  design, implement and monitor Aid for Trade 
programmes needs to be strengthened to ensure  the sustainability of appropriate trade and 
development initiatives. 
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