December 14, 2005, Hong Kong, Press Release

“Any contribution that the US has to make to an aid for trade package through the Doha round is contingent on breaking the log-jam in the tariff reduction negotiations”. These were the sentiments stated by US Trade Representative, Robert Portman, at a high level session on “Aid for Trade” organised by the World Bank and the IMF on the fringes of the Hong Kong WTO ministerial yesterday. In addition Portman, in a statement repeated as a mantra throughout the session, stated “any aid for trade package would compliment to a successful completion of the Doha Round and not a substitute for it”.

His comments were given clarity by the World Bank’s Vice President, Danny Leipziger, who in his presentation said that “an aid for trade package would only be a viable option if it were coupled with an effective package of market access delivered through completing the Doha Round”. He stated further that the Integrated Framework (IF), which brings together six major international institutions including the World Bank, to provide coordinated Trade Related Technical Assistance (TRTA) would be the main vehicle through which this support would be provided.

Later in the panel the UK’s Minister for International Development, Hillary Benn, highlighted the UK’s commitment for supporting the provision of an aid for trade package by stating that this was vital to the ability of developing countries to take advantage of the opportunities that a completion of the Doha Round could provide and called on other donors to do the same. On being asked what type of aid for trade commitments he wanted the international community to provide he answered that he wanted donors to increase their present aid for trade commitments but no binding commitments were presently being discussed.

The need for increased donor commitments at this stage of the Doha Round was illustrated by EU Trade Commissioner Peter Mandelson’s appearance on the panel which he used to announce the EU’s offer of increasing TRTA from Euro 400 million to 1 billion Euro per year by 2007.

The presentations of two developing world panellists, Lesotho’s Minister for Trade and Industry, Meli Malie, and Rwanda’s Commerce Minister, Professor Menasseh Nshuti, gave expression to the urgent needs that many developing countries face in building their capacity to trade and integrate into the global economy.

Minister Malie said that although Lesotho has been a part of the IF since 2002, the funding provided through this mechanism has so far been limited with on average only $1 million per country per year provided by donors since its inception. He also said that the IF was only providing support to Lesotho to tackle soft infrastructure issues such as improving customs procedures, but that an aid for trade package was required to support the development of hard infrastructure such as roads and ports.

Minister Nshuti highlighted the supply capacity constraints faced by countries like Rwanda that have recently come out of conflict and face difficulties in mobilising the funds required to invest in infrastructure development.

Overall the session suggested that there are few new commitments on the table as part of an aid for trade package and that new commitments are likely to be conditional on developing countries signing up to significant tariff reductions through a successful completion of the Doha Round. There is therefore a lot more work to be done before the Doha Round delivers a comprehensive and empowering development package for developing countries.