UK’s Aid for Trade Strategy

1. UK’s Aid for Trade Strategy Claire Durkin Director, Europe, International Trade & Development UK Government

2. “Free trade, one of the greatest blessings which a Government can confer on a people, is in almost every country unpopular” Thomas Macaulay, 1824

3. For Growth and Development • Trade and Investment • Economic policy • Development policy • International relations • International and internal scrutiny • Labour standards • Environmental policies “Everything is connected to everything else” Albert Laszlo Barabasi

4. Trade and Investment • Erodes “Import” “Export” bi-polars • Challenges RTAs • Not an option e.g. India’s 11th 5 year plan: Infrastructure investment must rise from 5% GDP (06-07) to 9% (2011-12)

5. Global FDI and Trade

6. The Present Average developed world tariffs • 1.7% goods • 5% agricultural products Average developing world tariffs • 6.4% goods • 13% agricultural products NTBs, Regulatory barriers. “Protect” “Nurture” “Defend”

7. Reducing Poverty

8. Developing countries share of trade rises as global integration intensifies… Exports from developing and developed countries, 2005-2030 US$2001 trln. $27 trln High-income countries Structure is changing: • South as source of demand • services Developing countries 45% 32% 22% Source: World Bank simulations with Linkage model; GEP 2007.

9. the Good, the bad and the Ugly • UK’s North Seapolicy • EU Common Agricultural policy • British Empire’s cotton policy.

10. UK Aid For Trade Strategy Increasing capacity within developing countries to trade and integrate successfully into the global economy whilst easing the costs of adjustment

11. The Challenges • Cutting transport costs • Upgrading trade-related infrastructure • Increasing regional trade & integration • Expanding, diversifying & adding value to agric & manufacturing • Improving trade & investment climate • Managing adjustment

12. High Transport Costs • Trucks at the Petrapole–Benapole border between India and Bangladesh 10 days – fruit/ vegetable exports for poor producers • Transport costs in East Africa on average 80% higher than USA & Europe • It costs as much to move a freight container from Mombassa to Kampala as it does from Mombassa to Shanghai • In Rwanda, the average import procedures124 days. OECD average 12 days.

13. Regulatory Frameworks • In South Asia, existing bilateral transit agreements and regulatory frameworks for cross border and rail transport prohibit best route to market • Lack of transit rights through Bangladesh: India’s North Eastern states’ trade additional 1,300 km to a journey from Calcutta to Agartala.

14. Bariers to Regional Trade • Regional trade 5% in Africa, 46% in NAFTA, 55% in East Asia and 62% in the EU • Internal barriers, weak infrastructure inter-connectivity and high transport costs – in South Asia, barriers are also strongly political

15. Reduced border delays & faster movement goods • (COMESA), the East African Communicty (EAC) and the Southern African Development Community (SADC) Regional Aid for Trade initiative, cut transport costs along North South Transport Corridor (DRC to Tanzania and DRC to South Africa) by 10% by the end of 2009 • Zambia and Zimbabwe One Stop Border Post in Africa at the Chirundu border. Setting up a OSBP between South Africa and Mozambique, and has been asked to support five more • Trade Investment Facility in Lesotho, the One Stop Shop, export applications processed in 15 minutes rather than 7 days. Exporters fill in 2 pages of forms instead of 23.

16. Improved customs performance Rwanda reduced transit times and improved revenue collection. • Revenue Authority nearly tripled tax revenue over five years, despite falling tax rates • Increase in poverty reduction expenditure from 5.3% of GDP in 2001 to 10.1% of GDP in 2005

17. Increased exports & income • Regional Trade Facilitation Programme (RTFP): Southern Africa increase exports of nuts, tea and coffee by 1500 tonnes (2006-7 • Licensing programme secures trademarks for Ethopia’s fine coffee brands in 28 countries.

18. Productivity and Standards • Lesotho, ComMark programme to enhance productivity in garments industry; employment of 50,000 people. • In Bangladesh, compliance with labour and health standards: 600 factories have completed audits improved productivity a 14% increase in sales turnover of assisted companies • Fisheries export in Mozambique supports 70,000. Regional Standards Programme helped maintain EU standards accreditation

19. UK AFT COMMITMENTS

20. Strategic Objectives • Build countries’ capacities to trade through growth & competitiveness strategies • Ensure trade results in poverty reduction & inclusive growth • Facilitate regional trade & integration, and ensure that EPAs are beneficial for the ACP • Build an international system that delivers more and better AFT

21. … THEMATIC ALLOCATIONS

22. … Geographical Spread

23. Deliverables • Delivery of EU G8 AFT spending targets - $4 billion per year and €2 billion per year by 2010 • A successful EIF up and running and delivering real trade-related technical assistance and support to LDCs. Contribution of £38 million over five years with £15.5 million over the first two years • Concrete plans and support for a 2nd phase EIF covering non-LDC, IDA-only countries by end of CSR period • A robust global monitoring framework on AFT (global indicators, regular reports, annual global WTO-led review, best practice, etc.), developed jointly with the OECD, World Bank, WTO, RDBs and other donor partners.

24. Delivery Challels • Programmes in countries and in regions • Core contributions to multilateral partners • Multilateral trust funds • International partnerships Think tanks, NGOs and academia • International agencies • Regional economic and integration institutions

25. UK Spend through Multilaterals April 2008 – March 2011: £1.15 billion (70% of overall UK spend) • £676 million to EU. • £472 million to World Bank and R.D.Bs. “Multilat is Hell” Victoria Nuland, quoted by Strobe Talbott Victoria Nuland, quoted by Strobe Talbott

26. Managing Multilateral Funding Symphonies Quartets Sonatas but who holds the baton? COUNTRIES MUST

27. CODA • Aid for Trade to enable developing countries benefit from economic climate. • Our challenge as leaders, as trade negotiators, as Governments, as economists, is to change the economic climate. • Never Take Open Markets For Granted

28. Overlapping African agreements… Nile River Basin COMESA IGAD ECCAS AMU CEMAC Somalia Sao Tomé & Principe Algeria Libya Morocco Mauritania Tunisia Egypt Cameroon Central African Rep. Gabon Equat. Guinea Rep.Congo ECOWAS Djibouti Ethiopia Eritrea Sudan Burundi* Rwanda* Ghana Nigeria Conseil de L’Entente Chad Cape Verde Gambia DR Congo Kenya* Uganda* Benin Niger Togo Burkina Faso Cote d’Ivoire Angola Guinea-Bissau Mali Senegal EAC Liberia Sierra Leaone Guinea Tanzania* Mauritius* Syechelles* Malawi* Zambia* Zimbabwe* SACU Comoros* Madagascar* WAEMU Mano River Union South Africa Botswana Lesotho CLISS Namibia* Swaziland* Reunion AMU: Arab Maghreb Union CBI: Cross Border Initiative CEMAC: Economic & Monetary Community of Central Africa CILSS: Permanent Interstate Committee on Drought Control in the Sahel COMESA: Common Market for Eastern and Southern Africa EAC: East African Cooperation ECOWAS: Economic Community of Western African Studies IGAD: Inter-Governmental Authority for Government IOC: Indian Ocean Commission SACU: Southern African Customs Union SADC: Southern African Development Community WAEMU: West African Economic & Monetary Union *CBI Mozambique SADC IOC

29. Bilaterals We give advice but we do not influence people’s conduct ” Rochefoucauld • Baldwin – making RTAs mutually compatible • Model FTAs • Role of WTO

30. Multilaterals DOHA DEVELOPMENT ROUND

31. Future World Trade Rounds Movement of Capital Movement of Labour Development, Standards, Climate Change = Global Responsibility To move from Georgics to Aeneid

32. Ever the Optimist It moves, all the same. Galileo