WORLD TRADE  
ORGANIZATION   
WT/COMTD/AFT/W/29 
27 October 2011 
 (11-5394) 
Committee on Trade and Development 
Aid for Trade Original:   English 
 
 
 
COMMUNICATION FROM BARBADOS ON BEHALF  
OF THE SMALL, VULNERABLE ECONOMIES 
 
  The following communication, dated 25 October 2011, is being circulated at the request of 
the delegation of Barbados on behalf of the Small, Vulnerable Economies (SVEs). 
 
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WTO's Support for Special and Differential A ccess to Aid for Trade for Small Economies  
Seeking such Funding from the Inte rnational Financial Institutions 
 
 I. AID FOR TRADE:  THE SVE CASE FOR SPECIAL AND DIFFERENTIAL 
TREATMENT 
1. The benefits of an Aid-for-Trade programme agreed at the Hong Kong Ministerial in 2005 
have great potential for assisting SVEs in overcom ing some of the difficulties and inefficiencies in 
their trading environments.  SVEs therefore welc omed the Initiative.  However, although SVEs are 
critically dependent on international trade for econom ic growth, their special needs for Aid for Trade 
have not been reflected in special and differen tial treatment by some international financial 
institutions (IFIs).  Their case is worth repea ting. Small, vulnerable economies suffer great 
disadvantages of diseconomies of scale due to small si ze.  In addition to sma ll geographic size, most 
projects and enterprises are small or medium sized and unit costs are therefore high.  Because many SVEs are geographically dispersed, they also have  high transportation costs and high shipping and 
trading costs.  This makes their products less comp etitive and adversely affects efficiency.  The cost 
of doing business is therefore considerably higher for small, vulnerable economies. 
2. A recent study (Razzaque, 2011)
1 has shown that the share in global trade of SVEs 
(39 countries in the study) fell from a level of 1.05 per cent of world trade in the early fifties to 0.62 per cent in 2008.  Similarly, the share of SVEs in the export of goods and commercial services 
(excluding oil exports) fell by half, from 0.6 per cent  to 0.3 per cent.  In addition, growth of these 
economies has been lower than that of any other group over the period 2000-2009.  Many SVEs have also been severely hit by the loss of trade prefer ences and trade liberalization initiatives.  For some 
countries this loss amounts to 30-50 per cent of export trade.  In addition, several countries face frequent climate related catastrophes which cause th em to constantly rebuild their economies, thus 
constraining the capacity to grow. 
                                                      
1 Razzaque, M., "Aid for Trade in Small Vulnerab le Economies", Commonwealth Secretariat, UK, 
October 2011. WT/COMTD/AFT/W/29 
Page 2  
 
  3. Given the special challenges faced by SVEs, the importance of Aid for Trade cannot be 
overemphasized.  These countries have become marg inalized in global trade and lag others in 
economic performance. 
4. Although the growth of Aid-for-Trade flows to SV Es has been encouraging, there is scope for 
addressing their needs much more effectively.  T hough SVEs tend to have relatively high per capita 
incomes, they are nevertheless highly disadvantaged , and are losing their relative capacity to register 
positive growth.  While this was aggravated by th e global economic crisis, this trend was already 
evident prior to the crisis.  It is therefore impor tant that some accommodation be made to them in 
accessing Aid for Trade, to help them arrest this decline.
2 
5. Making a special case for helping small econo mies to access funding from international 
financial institutions could be very useful in e nhancing the Aid-for-Trade programme.  This could 
serve small economies as a means of making their bid to counter credit access problems caused by the burdens of high indebtedness, graduation criteria, and factors occasioned by poor economic 
performances, which paradoxically, can limit their ac cess to Aid-for-Trade funding.  Data show that 
SVES have not been able to adequately access Aid fo r Trade, given their significant needs.  Several 
small economies are among the most highly indebted in the world, and this is a handicap in seeking 
additional funding.  There is therefore a case fo r seeking easier terms in the official loan and 
grant-funding market for small economies in general,  including highly indebted small economies.   
6. The WTO, as one of the few organizations that effectively recognizes small size and 
vulnerability, is invited to support the case of sm all, vulnerable economies and their need to access 
funding from international institutions, so that highly indebted developing countries and small, 
vulnerable economies generally, might be more successful in accessing Aid for Trade. 
7. Also, given the current global problems of many developed countries, there is likely to be a 
dearth of funds available in the international in stitutions, as donors to these institutions divert funds 
elsewhere.  As a result, many small, vulnerable ec onomies could be deprived of funding.  There is 
need therefore to take early action to prevent th is situation from worsening.  Small, vulnerable 
economies therefore seek to enlist the support of the WTO in that regard. 
8. While some international financial instituti ons have given some recognition to small, 
vulnerable economies, this has not led to any mean ingful modification on the conditions for lending to 
small economies. Presently, small, vulnerable economies in the WTO are recognized as a group 
deserving of special treatment.  This kind of acco mmodation needs to be accorded to these countries 
by other international instituti ons and donors.  Such programmes should lead to meaningful 
recognition which extends to special  treatment for small, vulnerabl e economies in their development 
efforts, aid requests and lending programmes.  SVEs  are therefore seeking recognition of the special 
needs of these countries in all international institutions, so as to ensure that that recognition is not just 
notional but translates into special and differential treatment in respect of funding, especially in this 
case, for Aid for Trade. 
9. WTO is therefore being asked to use its influen ce to promote changes in the approach of these 
institutions with respect to small, vulnerable ec onomies, having regard to the several mitigating 
factors, which are well documented and which sh ould be taken into account in disbursing funds, 
particularly funds for Aid for Trade.  This is  intended to help to make such economies more 
self-sufficient and less dependent on fu ture funding over the longer term.  
                                                      
2 Special and Differential Treatment is  already accorded to LDCs in IFIs.  WT/COMTD/AFT/W/29 
 Page 3 
 
 
  10. The advocacy role which the WTO can play in supporting the case of small, vulnerable 
economies cannot be overemphasized.  It is also consistent with the goa l policy coherence among 
International Institutions. 
II. MINISTERIAL PROPOSAL 
11. Noting the importance of Aid for Trade as a means of improving trade, Ministers urge the 
international financial institutions  to extend special and differentia l treatment to small, vulnerable 
economies in respect of requests for funding for Aid-fo r-Trade initiatives.  Ministers further urge that, 
in considering such requests, flex ible conditions shall be applied a nd that small size and vulnerability 
should be a reason in itself to accord Special and Differential access to funding for Aid for Trade to 
Small, Vulnerable Economies. 
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