WORLD TRADE  
ORGANIZATION  WT/AFT/W/10 
22 May 2006 
 (06-2456) 
Aid for Trade Task Force Original:   English 
  
 
COMMUNICATION FROM BRAZIL 
  
 The following communication, dated 17 May 2006, is being circulated to the Aid for Trade 
Task Force at the request of the Permanent Delegation of Brazil.   
 
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AID FOR TRADE 
 
Non-Paper by Brazil
1 
  
I. GENERAL GUIDELINES 
1. The work on Aid for Trade (AFT) poses news challenges and opportunities to the WTO. The 
Organization was not conceived as a development agency, but since the beginning, however, the 
development dimension has been an integral part of its work.  Although the WTO has delivered some 
important contribution on trade-related assistance an d capacity building activities, the Organization is 
not adequately equipped to address some AFT concerns, such as supply-side constraints and 
adjustment costs associated with trade liberalization.   The WTO should not be expected to deal with 
those issues in the same way a de velopment agency or a financial institution would.  It should not, 
however, shy away from some of the implications of  the Aid for Trade debate, especially in terms of 
coherence and in making more explicit some of the co sts of trade liberalization and its limitations as 
an instrument for growth and development.  A FT should not be seen as a "negotiating issue", but 
rather as one among many tools for promoting the development dimension of  the Doha Development 
Agenda (DDA).  
2. Thus, in order to deal in a coherent and eff ective manner with the issu e of AFT, in accordance 
with the terms of paragraph 57 of the Hong Kong Mi nisterial Declaration, a set of general guidelines 
should be agreed on how to operationalize AFT.  Brazil proposes the following guidelines:  
(a) AFT should not be conceived as a substitute for the development gains to be derived 
from negotiations on market access and the elaboration of balanced trade rules that 
fully incorporate the development dimension of the DDA. 
(b) AFT is not a mechanism of compensation fo r the short-term costs associated with 
trade liberalization. It must play an important role in facilitating adjustment , but it 
should not be expected to bear all its costs. 
                                                     
 
1 This paper contains initial views by Brazil and also tries to reflect the ideas expressed by other 
members of the GRULAC. It is submitted as a preliminar y contribution to the debate in the Task Force on Aid 
for Trade and subject to corrections and further revisions. WT/AFT/W/10 
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  (c) Resources for AFT should be additional  to those already in place, and for the most 
part be in concessional terms or in grant form. 
(d) AFT should be provided without imposing conditionalities, bearing in mind the 
particularities of the recipient countries, especi ally LDCs, and the need to facilitate a 
timely, predictable and regular disbursement of aid. 
(e) AFT should not be used as a bargaining tool geared to push other agendas. 
(f) Ownership must remain with members receiving AFT in its different forms. Members 
shall be free to set their priorities. 
II. SCOPE 
3. Aid for Trade is a rather generic term that can encompass a broad range of issues, from 
supply-side constraints (such as productive capacity) to the adjustment costs associated with trade 
liberalization (such as losses of jobs due to lab our displacement), in addition to many activities 
associated with trade-related assistance and capacity building (as training of personnel on trade issues, 
helping to implement WTO agreements, setting dom estic standards and regul atory frameworks). AFT 
activities should not be limited to the results of the current round, but extended to cover existing 
agreements. There is a need to clearly define th e trade component of the international development 
agenda, in order to determine what can be done with in the WTO, and what better fits the mandate of 
other international organizations and agencies. Hence, the following definition of scope for AFT 
seems appropriate and in accordance with paragra ph 57 of the Hong Kong Ministerial Declaration. 
(a) Trade-related technical assistance and capacity building: help members to 
formulate trade policies, participate in trade negotiations and implement WTO 
agreements, with a view to fulfilling th e development objectives of the Round. AFT 
should not be limited to merchandise trade, but also involve services, rules and dispute settlements. This would include activities such as: 
• Technical cooperation strictu sensu  on TBT and SPS. 
• Training of government personnel thr ough courses, seminars and workshops. 
• Financial assistance and technical advi ce on the creation of an institutional 
framework for trade policy. 
• Advisory work on the elaboration of regulatory legislations, especially in the 
area of services. 
• Activities on trade promotion and business facilitation. 
• Assistance in integrating SMEs in the trade system. 
• Support for the Advisory Centre for WTO Law. 
 
Some international bodies with expertise in this area : WTO, UNCTAD, ITC, UNDP, 
UN Regional Commissions.  - The coordinating role in this area should be played by the WTO. 
(b) Assistance to deal with supply-side constraints  (including trade-related 
infrastructure) : As stated in paragraph 57 of the Hong Kong Ministerial Declaration 
"Aid for Trade should aim to help developing  countries, particularly LDCs, to build 
the supply side capacity and trade-related infr astructure that they need to assist them 
to implement and benefit from WTO Agreem ents and more broadly to expand their 
trade ". With this definition, we could expect to include in this area activities such as:  WT/AFT/W/10 
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  • Projects to enhance productive-capacity in industry, agriculture, fishing, 
forestry, banking, tourism. 
• Projects to build and/or expand infrastructure directly related to trade, such 
as transports (ports and roads) and customs. 
• Projects to build and/or expand general infrastructure in energy and 
telecommunications. 
• Development of a framework to mobilize resources from migrant and 
temporary workers. 
 
Some international bodies with expertise in this area : World Bank, Regional 
Development Banks, FAO, IFAD, IICA, UNIDO, CFC, and UN Regional Commissions.  
- The coordinating role in this area should be played by the World Bank 
together with the regional development banks. 
(c) Assistance with adjustment costs:  there is a need to define some short-term costs 
associated with multilateral trade liberali zation, such as (i) balance-of-payments 
difficulties, (ii) social costs, i.e. unemp loyment due to labour displacement in 
liberalized sectors, (iii) loss of fiscal revenue  due to lowered tariffs, and (iv) erosion 
of preferences. In order to deal with those problems, some established mechanisms 
can be improved and others could be envisaged, such as:  
• The IMF Trade Integration Mechanism (TIM) to address balance-of-
payments difficulties.  
• Development of a better framework to deal with the links between trade 
liberalization and poverty reduction.  
• Programs to reform tax systems to ease the burden of tariff revenue losses.  
• Funds for diversification of exports for commodity- and preference-
dependent countries.  
 
Some international bodies with expertise in this area : IMF, World Bank, Regional 
Development Banks.  - The coordinating role in this area should be played by the IMF. 
III. IMPLEMENTATION 
4. With a view to make AFT truly effective and operational, a proper mechanism should be 
established for the overall coordination of activitie s and to complement the operative coordination 
provided by the different agencies in the three ar eas mentioned above. This mechanism would operate 
along the following lines:  
 (i) Members would request AFT assistance accord ingly to their own priorities and needs, 
and within the scope defined in Section II above;  
 (ii)  the relevant organizations and Member s in a position to do so should respond to the 
presented submissions in a coordinated way; 
 
 (iii) there shall be continuous evaluation of the AFT projects presented under the 
mechanism, in order to ensure their eff ectiveness in accordance to the terms of the 
Hong Kong Ministerial Declaration ("to help  developing countries […] to implement WT/AFT/W/10 
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  and benefit from WTO Agreements and more broadly to expand their trade") and to 
the guidelines set in Section I (especially regarding required conditionalities and the misuse of AFT as "compensation"); 
 (iv)  the mechanism shall make an overall assessment on the additionality of resources 
mandated in the Hong Kong Ministerial Declaration and other declarations. 
 
5. In order to meet those objectives, the me chanism should have the following elements: 
(a) The mechanism should be open to the par ticipation of all Members of the WTO. 
(b) All WTO developing Members  can submit their needs on Aid for Trade. 
(c) As appropriate, and upon request, the mechanis m could work at the regional level, as 
a vehicle for channelling aid to existing regi onal bodies and institutions with a view 
to strengthen regional integration. 
(d) The mechanism should work as a collegiate bod y, under the aegis of the WTO, with 
the participation of representatives from the WTO Secretariat, UNCTAD, IMF, 
World Bank, ITC, UNDP, UN Regional Co mmissions and regional development 
banks. As appropriate, and upon request , other relevant organizations shall 
participate, such as UNIDO, CFC, IFAD and the OECD Development Assistance 
Committee (for instance, on availability of  adequate funding and the assessment of 
additionality).  
(e) The mechanism must identify needs, propo se solutions, monitor implementation of 
projects, and evaluate results. The me chanism should not create additional 
bureaucracy, but rely on the existing facilities of the organizations involved, to convene meetings and/or to follow up the implementation of projects. Administrative 
costs should remain low. 
(f) In the role of observers, representatives from NGOs and from the private sector 
would also be invited, with the aim of fostering the exchange of ideas, and 
strengthening the links between private investment and trade opportunities.  
(g) The mechanism shall complement, not dupli cate, the work done under the Integrated 
Framework (IF) for LDCs. In this regard, due account must be taken of the existing 
DTIS matrices in order to direct funds for projects. 
(h) For delivering AFT, the existing funds and mechanisms should be used, and 
enhanced as appropriate, with, for instance,  (i) the provision of additional resources, 
and (ii) the creation of new windows to channel existing resources. 
(i) The mechanism shall build upon the WTO mandate on coherence , especially to 
ensure that (i) it is used as a tool to promote the development dimension of trade liberalization, (ii) AFT is delivered in th e form of grants and concessional loans, and 
(iii) that existing conditionalities on financ ial programs (from the IMF or the World 
Bank, for example) can be made flexible in order to meet the objectives of Aid for 
Trade (Section I above). 
6. The mechanism should be structured as follows :  (i) a unit in the WTO Secretariat to 
coordinate activities in TRTA/TRCB and to provide assi stance;  (ii) a joint committee chaired by the 
DG of the WTO that will meet every six months to c oordinate the different dimensions of AFT;  and  WT/AFT/W/10 
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  (iii) a biannual debate in the Ge neral Council on AFT on the basis of a report by the DG to review the 
operationalization of AFT and to give political gui dance on AFT. One of these debates should have 
the participation of representatives from the pa rticipating agencies and focus on the issue of 
coherence. 
IV. AVAILABILITY OF RESOURCES 
7. The above considerations are predicated upon th e availability of additional resources for AFT. 
This would imply a significant change in the long-term  trend of decrease in the availability of official 
development assistance. Better coordination of effort s should lead to improvements in the application 
of current resources. Nevertheless, the need to tackle supply-side constraints, especially in LDCs and 
other vulnerable economies, would require a majo r mobilization of new funds. Although contribution 
from other stakeholders (NGOs, private sector) is  important and should be fostered, there is no 
replacement for a substantial increase in official development assistance. 
8. The current round of trade negotiations was launched with the commitment to put 
development at the center of the multilateral trad ing system. This requires an outcome of the 
negotiations in all areas that is not only supportiv e of development objectives but also that actively 
promotes the development dimension of trade liberalization. AFT cannot replace the need for 
incorporating the development pers pective in the substantive results  of the negotiations. AFT can and 
should complement these results by helping to bette r integrate developing countries, especially LDCs, 
in the multilateral trading system. In the final analys is, this is impossible to dissociate from a broader 
development perspective, where trade should work  as an engine for growth and for economic and 
social development, with a view to poverty reduction. 
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