WORLD TRADE  
ORGANIZATION   
WT/COMTD/AFT/W/29/Rev.1 
9 November 2011  
 
(11-5741) 
Committee on Trade and Development 
Aid for Trade Original:   English 
 
 
 
COMMUNICATION FROM BARBADOS ON BEHALF  
OF THE SMALL, VULNERABLE ECONOMIES 
 
Revision 
  
 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). 
 
_______________ 
 
 
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 (AfT) progra mme agreed at the Hong Kong Ministerial in 
2005 have great potential for assisting economies whic h are small and vulnerable in overcoming some 
of the difficulties and inefficiencies in their trad ing environments.  SVEs therefore welcomed the 
initiative.  However, although SVEs are critically  dependent on international trade for economic 
growth, their special needs for Aid-for-Trade have  not been reflected in special and differential 
treatment by some International Financial Institu tions (IFIs).  Their case is worth repeating. 
economies which are small and vulnerable suffer grea t disadvantages of diseconomies of scale due to 
small size.  In addition to small geographic size, most projects and enterprises are small- or 
medium-sized and unit costs are therefore high.  Because many are geographically dispersed, they 
also have high transportation costs and high shippi ng and trading costs.  This makes their products 
less competitive 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 around 1950 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/Rev.1 
Page 2  
 
  3. Given the special challenges faced by economies which are small and vulnerable, the 
importance of Aid for Trade cannot be overemphasize d, since small countries must trade to survive, 
both on the import and export side.  However, these countries have become marginalized in global trade and lag others in economic performance. 
4. Although the growth of AfT flows to SVEs has been encouraging, there is scope for 
addressing their needs much more effectively.  T hough some SVEs tend to have relatively high per 
capita incomes, they are nevertheless highly disadva ntaged, and are losing their relative capacity to 
register positive growth.  While this was aggravat ed by the global economic crisis, this trend was 
already evident prior to the crisis.  It is theref ore important 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, some of which paradoxically, can limit  their access to Aid-for-Trade funding.  Data 
show that SVEs have not been ab le to adequately access Aid for Trade, given their significant needs.  
Several small economies are among th e most highly indebted in the world, and this is a handicap in 
seeking additional funding.  There is therefore a case  for 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 th at small vulnerable economies generally, including 
highly-indebted developing countries might be more successful in accessing Aid for Trade.   
7. 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 economies which are small and vulnerable in their 
development efforts, aid requests and lending progra mmes.  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, in this 
case, for Aid for Trade.   
8. 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 s hould be taken into account in disbursing aid and 
funding, particularly funds for Aid for Trade.  This  is intended to help to make such economies more 
self-sufficient and less dependent on futu re funding over the longer term.   
9. 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.   
                                                      
2 Special and Differential Treatment is  already accorded to LDCs in IFIs.  WT/COMTD/AFT/W/29/Rev.1 
 Page 3 
 
 
  II. MINISTERIAL PROPOSAL 
10. Noting the importance of Aid for Trade as a means of improving trade, and its critical 
importance to small economies, WTO is encouraged , through the Director General, to urge the 
international financial institutions to give special  consideration to small size and vulnerability in 
respect of requests for funding for Aid-for-Trade initia tives.  In considering su ch requests, small size 
and vulnerability should be a reason in itself to accord Special and Differential access to funding for 
Aid for Trade to economies which are small and vulnerable. 
__________