WORLD TRADE  
ORGANIZATION  WT/AFT/W/26 
29 May 2007 
 (07-2188) 
Aid for Trade  
  
 
WTO WORK PROGRAMME ON AID-FOR-TRADE 
 
Background Note prepared by the WTO Secretariat
 
 
 
I. BACKGROUND 
1. One of the aims of the World Trade Organizati on (WTO)  is to help developing countries, and 
in particular the poorest among them, expand their production and exports of goods and services.  
Some countries are succeeding well – but others are not, including a large number of least-developed 
countries (LDCs) where trade is failing to make th e contribution that it should be making to economic 
growth and poverty reduction. 
2. The Doha Round of multilateral trade negotiations , launched in 2001, set out to address part 
of this problem by aiming to reduce trade-restric ting and distorting practises that developing countries 
and LDCs face in their main devel oped-country export markets and in  South-South trade.  Ambitious 
results there will go a long way towards fulfilling the development promise of the Doha Round. 
3. Market access improvements or disciplines ensuring a more level playing field may not be 
sufficient to lift everyone onto the path of sustaine d trade growth.  They need to be accompanied by 
Aid for Trade to address another part of the problem that many developing countries and LDCs 
confront.  That is, insufficient human, institution al and infrastructural capacity to participate 
effectively in international trade and expand the quantity and qualit y of goods and services they can 
supply to world markets at competitive prices.   
4. The need to provide additional Official Develo pment Assistance (ODA) to help correct this 
deficit in trade-capacity was recognized in 2005 by  G-8 leaders at the Gleneagles Summit, and by 
their finance and development Ministers at meetings  of the IMF and World Bank.  Their initiative was 
endorsed at the WTO Ministerial Conference in Hong Kong in December 2005, when trade Ministers directed WTO member governments and the WTO Secr etariat to develop a workable Aid-for-Trade 
package to complement a successfu l conclusion to the Doha Round. 
5. A comprehensive Aid-for-Trade package needs to  respond to two related concerns.  One is 
the assistance that some WTO Members will need to  help them implement the results of current 
multilateral trade negotiations, and to cope with certain economic adjustment costs that may be 
incurred.  Effective implementation of WTO commitmen ts is in the interest of the WTO membership 
as a whole.  
6. The second, broader, set of concerns is the insufficiency of trade-related capacity in many 
WTO Members to allow them to benefit from the opportunities the multilateral trading system creates 
to increase investment and expand the production of tradable goods and services.  This covers a wide 
area – from setting up testing facilities that will help  ensure products can meet technical, sanitary and 
phyto-sanitary regulations and standa rds in export markets, through to much larger-scale projects such 
as improving transport infrastructure and trade logistics.   WT/AFT/W/26 
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  7. The core role of the WTO remains anchored in  the functioning of the multilateral trading 
system, but through its coherence mandate its responsibilities and activities are evolving to assist 
developing countries and LDCs to reap greater, pr actical, trade benefits from their market access 
opportunities.  The WTO is not a financing agency, nor does it have any ambition to become one, but 
its expertise and advocacy role in the area of trad e can make it a valuable partner in collaborative 
efforts to meet trade-related capacity-building n eeds.  These involve beneficiary countries and their 
development partners that have the necessary fina ncial and technical expertise – the Bretton Woods 
institutions, regional development banks, specialized  intergovernmental agencies and bilateral donors. 
8. Future work on Aid-for-Trade in the WTO n eeds to be inspired by three principles. 
• Aid-for-Trade must be a complement to, not a s ubstitute for, ambitious results from the Doha 
Development Agenda.  Increasing trade opportu nities for developing countries and in 
particular the LDCs, remains far and away the most important contribution that the WTO can 
make to development.  
 
• Aid-for-Trade must not have to compete for existing ODA flows with other development and 
poverty reduction priorities.   
 
• The case for attracting additional Aid-for-Trade  to implement WTO agreements and build 
trade-related capacity more broadly must have  the commitment of trade, development and 
finance ministers in developed and developing countries and LDCs and the support of private 
business if it is to live up to its promise of catalysing their trade-related investment and 
production  
 II. WTO MANDATE ON AID-FOR-TRADE 
 (Hong Kong Ministerial Declaration,  18 December 2005, paragraph 57) 
 
"We welcome the discussions of Finance and Development Ministers in various fora, 
including the Development Committee of the World Bank and IMF, that have taken place this year on expanding Aid for Trade . Aid for Trade should aim to help 
developing countries, particularly LDCs, to build the supply-side capacity and trade-
related infrastructure that they need to assist them to implement and benefit from 
WTO Agreements and more broadly to expand their trade. Aid for Trade cannot be a 
substitute for the development benefits that will result from a successful conclusion to 
the DDA, particularly on market access. However, it can be a valuable complement 
to the DDA. We invite the Director-General to create a task force that shall provide 
recommendations on how to operationalize Aid for Trade. The Task Force will provide recommendations to the General Coun cil by July 2006 on how Aid for Trade 
might contribute most effectively to the development dimension of the DDA. We also 
invite the Director-General to consult w ith Members as well as with the IMF and 
World Bank, relevant international organizations and the regional development 
banks with a view to reporting to the Ge neral Council on appropriate mechanisms to 
secure additional financial resources for Aid for Trade, where appropriate through 
grants and concessional loans". 
9. The Hong Kong Declaration created a new WT O work programme on Aid-for-Trade that 
aims "to help developing countries, particularly LD Cs, to build the supply-side capacity and trade-
related infrastructure that they need to assist th em to implement and benefit from WTO Agreements 
and more broadly to expand their trade".  It set in motion a two track process to move the agenda 
forward:  first, the WTO Director-General wa s asked to conduct consultations with partner 
institutions, including UN agencies, the World Bank,  the IMF, and the regional development banks,  WT/AFT/W/26 
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  on securing additional financial resour ces.  Second, the Director-Gener al was also asked to create a 
Task Force – consisting of a representative group of countries – to advise on how best to "operationalize" this additional f unding, and ensure that it contribut ed to the development dimension 
of the DDA.   The objective was to have in pl ace and operational in the immediate term secure multi-
year commitments from the main bilateral donors of substantial, additional Aid-for-Trade - in line 
with the G-8 commitment on increasing ODA flows that was made in Gleneagles in June 2005 and 
with subsequent statements on increased Aid-for-Tra de that were made in  November-December 2005 
by G-7 Finance Ministers, the European Council, and trade Ministers in Hong Kong.
1 
III. AID-FOR-TRADE TASK FORCE 
10. In February 2006, the Director-General establis hed an Aid-for-Trade Task Force composed of 
thirteen WTO Members – Barbados, Brazil, Canada , China, Colombia, the European Union, Japan, 
India, Thailand, the United States, and the coordi nators of the ACP, African and LDC Groups of 
WTO Members (at that time Mauritius, Benin, an d Zambia, respectively).  The Task Force was 
chaired ad personam by the Permanent Representative of Sweden  to the WTO, Ambassador M. Horn 
Af Rantzien.  International organizations – including UNCTAD, UNDP, UNIDO, the World Bank, 
the IMF, the ITC, the ADB, the AfDB, the IADN, and the OECD - were invited to act in an advisory 
role to the Task Force on a regular basis. 
11. After almost six months analysis and delibera tion, the Task Force delivered its consensus 
report on 27 July 2006  – which was subsequen tly endorsed by the WTO General Council on  
12 October 2006.  The report articulates a rationale  for Aid for Trade, places Aid for Trade in a wider 
development framework, provides a wide definition of  its scope and coverage, and sets out a series of 
proposals for further work and eventual operationalization of Aid for Trade, with a focus on: 
strengthening needs assessment at the country an d regional level; strengthening donor response; 
strengthening the "bridge" between needs and response;  and strengthening monitoring and evaluation.   
In particular, the Task Force invited the Director General to set up a monitoring body in the WTO, the 
result of which would form the basis of an annual Aid-for-Trade Debate. 
IV. CONSULTATIONS ON AID-FOR-TRADE BY THE WTO DIRECTOR-GENERAL 
12. In parallel, the Director-General  carried out a wide series of consultations throughout 2006 on 
"appropriate mechanisms to secure additional financial resources for Aid-for-Trade".  His 
consultations focused in particular on how the WT O could best cooperate with intergovernmental 
financial and development agencies and with the main bilateral donors to support the expansion of 
their programmes of assistance for trade-related projects, particularly supply-side capacity and 
infrastructure, and to help devel oping countries and LDCs strengthen th eir ability to attract and absorb 
substantially increased quantities of Aid-for-Trade a nd allocate it to viable trade-related projects. 
13. In his Report to the General Council on Aid for Trade on 14 December, the Director-General 
affirmed that, based on these consultations, the ma in bilateral and multilateral agencies remained 
committed to following through with their pledges to increase and strengthen Aid for Trade, and that a 
number of other donors – both developing and deve loped – had also signalled a willingness to 
participate in the Aid-for-Trade initiative.  He  also outlined his proposals for establishing a 
monitoring and evaluation function in the WTO, the implantation of which will be a central focus of 
the WTO's Aid-for-Trade work programme in 2007.  
                                                      
1 In Hong Kong, Japan announced development assistance spending on trade, production and 
distribution infrastructure of $10 billion over three ye ars, the U.S. announced Aid-for-Trade grants of 
$2.7 billion a year by 2010, and the E.U. and its member  States announced trade-related development assistance 
spending of € 2 billion per year by 2010.  WT/AFT/W/26 
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  V. WTO MONITORING AND EVALUATION 
14. The rationale for improved monitoring and eval uation is the need – embodied in the Paris 
Declaration on Aid Effectiveness – to strengthen mutual accountability between donor and recipient 
countries through improved transparency.  One of the Task Force's conclusions was that existing 
mechanisms for monitoring, reviewing and evaluatin g Aid for Trade were inadequate – and there was 
a lack of transparency on assistance provided and results obtained.  Improved monitoring and 
evaluation was essential for building confidence that  increased Aid for Trade would be delivered and 
used effectively – and for enhancing the credibility  of donors' commitments.  Greater transparency 
was needed to provide incentives for donors and recipi ents to work together more effectively to 
advance the Aid-for-Trade agenda.  
15. The WTO is well placed to play this monitoring role, by reviewing on a regular basis whether 
Aid-for-Trade is being adequately funded and whethe r it is delivering the expected results.  The WTO 
has a direct interest in ensuring that all its Members benefit from trade and WTO agreements.  It is a multilateral, consensus-based organization where developing and develope d countries have equal 
weight.  And, it has institutional experience in reviewing complex policy areas through its Trade 
Policy Review Mechanism.  At th e same time, the WTO's role should be largely limited to providing 
"outputs" – evaluating information and disseminatin g results and best practices – while relying on 
other agencies' and organizations' experience in th is area in addition to resources on the ground to 
provide the necessary "inputs" – includ ing data, information and case studies. 
16. Monitoring and evaluation in the WTO will take place on three levels: (1) a global review of 
Aid-for-Trade flows (using data compiled by th e OECD-DAC database) to  assess whether additional 
resources are being delivered, to identify where ga ps lie, to highlight where improvements should be 
made, and to increase transparency on pledges a nd disbursements; (2) evaluations of national, 
regional and multilateral donors' Aid-for-Trade ac tivities (based on donor self-assessments), to ensure 
the dissemination of best practices across countries,  to identify areas for improvement and to increase 
transparency on pledges and commitments; and (3) country- and region-based monitoring and 
evaluation (based recipient "case studies") to provide  a more focused, country-specific perspective on 
whether trade needs are being met, financial r esources are being provided, and Aid for Trade is 
effective on the ground.   
17. Improved monitoring and evaluation of Aid for Tr ade will need to be both quantitative (e.g., 
the amount of Aid for Trade in terms of commitm ents and disbursements) and qualitative (e.g., the 
impact of Aid for Trade on trade growth, export diversification, economic  development, poverty 
reduction, etc.).  The value-added of the WTO will lie as much in the latter, as in the former.  In this 
respect, the various levels of Aid-for-Trade monito ring will form the substanc e of an Annual Aid-for-
Trade Report and Debate amongst all WTO Members, where widely dispersed interests and activities 
can be woven together into some common themes. 
VI. THE ROAD AHEAD 
18. "Coherence", broadly defined, is critical to Aid for Trade.  This initiative is a test of the 
WTO's ability to work more cooperatively – or "coher ently" – with a range of national, regional, and 
international actors, including the private sector.  There is no intention in the Secretariat – and no appetite among Members – to expand the WTO's ma ndate or to turn the organization into a 
development agency. The challenge is not to invent  a new mechanism, but rather to get the many 
existing mechanisms to work together more effectivel y.  In this respect, the WTO, has a catalytic role 
to play – ensuring that relevant agencies and organizations understand the trade needs of WTO 
Members and encouraging them to work together more coherently and effectively to address these 
needs.    WT/AFT/W/26 
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  19. The surest way for the WTO to reach a successful and operational result is to work on the one 
hand with multilateral, regional an d bilateral donors to increase flows of technical and financial 
assistance to trade through existing channels, and on the other with developing countries and LDCs to 
assist them to identify their trade -related needs that could be met by additional Aid for Trade.  The 
WTO needs – and will continue to need - the suppo rt of UN agencies, the OECD DAC the IMF, the 
World Bank, regional development banks, and other relevant international agencies to bring their 
expertise to bear in encouraging their own member ships to expand their financing of trade-related 
programmes.  And since the WTO has no in-country representation, the support of these agencies will 
be needed in particular to assist developing coun tries and LDCs to integrate viable trade-related 
projects into their development programmes and poverty reduction strategies for which they are 
seeking ODA assistance.   
20. In that regard, one aim of the WTO in 2007 will be to strengthen the dialogue between trade, 
finance and development officials on key principles of aid effectiveness – such as local ownership and 
integrating trade into country programmes – and on the role that trade infrastructure can play in 
meeting international developmen t goals alongside, and without diminishing, ODA spending on social 
infrastructure. 
 
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