Outline

1. WTO Workshop on Small, Vulnerable Economies (SVEs) and Aid for Trade:Identification of Regional Aid for Trade Needs and Funding for the Pacific – Australia’s responseSabrina Varma, Trade Adviser, AusAID16 February 2011

2. Outline • Australia’s overall Aid for Trade objectives • Australia’s response to Aid for Trade needs in the Pacific region (objectives, composition, modalities) • Pacific Regional Aid for Trade Strategy • Response variables for near future • Challenges from a donor perspective • Concluding remarks

3. Australia’s Aid for Trade: rationale and objectives • Australia’s Aid for Trade continues to evolve. • Australia's Trade and Development Statement 2009 set out our approach which rests on two pillars: (i) facilitating market access because the international system must be equitable (including by building the capacity of developing countries to negotiate and implement international trade agreements); and (ii) building competitive and productive economies to take advantage of global trading opportunities.

4. Australia’s Aid for Trade Objectives • Specific objectives guide Australia’s Aid for Trade: (i) help developing countries engage in the multilateral trading system and regional trade initiatives; (ii) boost trade and investment flows; (iii) encourage diversity in trade activities; and (iv) improve economic integration on a regional and global basis.

5. Australia’s Aid for Trade tailored to the Pacific 1. Effective participation and integration and improving market access • Support aimed at assisting the FICs to pursue their interests in an informed manner, including through: training and research; building the capacity to negotiate effectively when entering into international and regional trade agreements; assisting to implement trade agreements and comply with international standards around food and health safety; and helping to overcome the practical challenges of export procedures. 2. Building international competitiveness and productive capacity • Support aimed at assisting the FICs to build their international competitiveness, productive capacity and the ability to benefit from trade liberalisation, in particular to: (i) improve trade-enabling infrastructure, (ii) improve the skills base; (iii) improve the business environment and (iv) promote good policy settings and link trade and development policy.

6. Australia’s Aid for Trade tailored to the Pacific • Aims: • Increase capacity of FICs to benefit from global trade and regional integration • Address challenges in expanding markets • Translate increased trade opportunities into improved development outcomes • Focus of activities on: - Trade development and promotion • Infrastructure • Education and training • Economic Management • Private Sector Development

7. Australia’s Aid for Trade in the Pacific: context • Australia does not have an overall Aid for Trade program or specific facility • Australia’s total Aid for Trade activities represent approx 15% of our total ODA • Geographically approx 35% of Australia’s Aid for Trade is directed at the East Asia region, followed by 23% in the Pacific • Largest bilateral recipients are Indonesia followed by Papua New Guinea.

8. Australia’s Aid for Trade in the Pacific: composition

9. Australia’s Aid for Trade in the Pacific: how • Delivered bilaterally (through partnerships for development frameworks); on a multi-country level (cost effective way of delivering support) and on a regional basis (to directly support regional integration/cooperation). • Bilateral: all commitments jointly identified and agreed and draw from partners’ national development plans. • Reinforces partner country leadership of development policy and genuine development partnership dialogue through annual dialogue to assess progress and determine focus. • Private sector development or economic livelihoods/rural development are priority areas in less than half of the 11 partnerships which have been signed. • Trade is not featured explicitly, although the Samoan partnership references regional integration. • Regional: The Pacific Plan sets out regional priorities in context of regional integration. • Australia supports the Plan, largely through ongoing financial support to Pacific regional organisations and specific regional activities in areas such and trade facilitation and labour mobility. • PACER Plus process: support for participation and implementation

10. Pacific Regional AfT Strategy • Welcome Pacific efforts for developing a regional strategy • Ongoing dialogue • Renew and Refresh process • Prioritisation, streamlining (to avoid duplication) and simplification • Take into account ongoing efforts of donors to improve trade capacities of FICs through the provision of regional assistance and existing and prospective trade agreements: identify what is already being funded and all funding sources.

11. Response variables for the near future: • Further refinement of regional strategy and findings of the stocktake of trade facilitation activities in the region on a regional and country basis; • Our budget • Current Aid Review • PACER Plus developments (i.e. support to implement agreement)

12. Challenges from a donor perspective • Strengthening understanding of the role of trade in economic growth and poverty reduction among program managers and across government; • Involvement of numerous government agencies (although enables specialist technical expertise) increases challenge of coordination and harmonisation; • Supporting diagnostics and trade specific objectives at project/program level (EIF); • Developing Aid for Trade specific monitoring and evaluation; and • Engaging more closely with the private sector and civil society in the region on Aid for Trade.

13. Concluding remarks • Australia’s already substantial development assistance – and as a part of that - Aid for Trade - will continue and expand in the Pacific – in line with our overall increase in Aid for Trade. • Australia’s Aid for Trade, as the case with other development assistance in the Pacific, is based on being demand driven, taking into account the heterogeneous nature of the region and the need to be consistent with established frameworks. • Therefore from our perspective it is essential that future support adheres to development effectiveness principles, including through careful coordination with partner governments’ own aid management processes, the Pacific Partnerships for Development and the Cairns Compact on Strengthening Development Coordination in the Pacific.

14. Thank you for your attention Contacts: Sabrina Varma, Trade Adviser, Economics Section, AusAID, Canberra, Australia Sabrina.Varma@ausaid.gov.au Or Christine Groeger, Manager, Pacific Branch, AusAID, Canberra, Australia 1414

15. Appendix: Examples of Australian Aid for Trade in the Pacific – Trade Policy and regulations - Pacific Regional Agricultural Market Access (PRAMA) • To assist Pacific countries to meet customs and quarantine requirements of key trading partners, including Australia • initial focus: Solomon Is, Vanuatu, Tonga, Samoa, Fiji • Approx $16 million over 4 years • Pacific Horticultural and Agricultural Market Access (PHAMA) • will assist government agencies and industry to address regulatory constraints to market access for high value agricultural and horticultural products • Oceania Customs Organisation (OCO) • core funding to improve customs service in the region

16. Appendix: Examples of Australian Aid for Trade in the Pacific – Building productive capacity - Australia-Pacific Technical College (APTC) • Provides Pacific Islanders with Australian qualifications • To increase productivity and address regional skill shortages • To improve employment opportunities and labour mobility • 2007-08 to 2010-11; ~3000 students • Offers Australian qualifications in: • hospitality and tourism • health and community services • automotive, construction, electrical and manufacturing. • Now planning next phase, 2011-2015

17. Appendix: Examples of Australian Aid for Trade in the Pacific – Trade Policy and regulations – support for effective participation in PACER Plus • Current support aimed at building skills and knowledge through training and research to • negotiate and implement trade agreements • comply with international standards (e.g. food and health safety) • determine trade policy and program priorities Specific Activities: • Trade Research Initiative and other research • Australian Leadership Award Fellowships • Costs of attending PACER Plus meetings • Supporting the Office of Chief Trade Adviser

18. Appendix: Examples of Australian Aid for Trade in the Pacific – Economic Infrastructure • Growing support for infrastructure development - particularly in the trade-enabling sectors of telecommunications, energy and transport. Inadequate and unreliable infrastructure is one of the most significant constraints to growth and increasing exports from the Pacific. • Australia’s assistance to the Pacific for infrastructure development is increasing through the Infrastructure for Growth Initiative (IFGI) and Pacific Region Infrastructure Facility (PRIF). • Australia is providing $171.1 million over 5 years to improve infrastructure in the Pacific, including: • IFGI funding of $44 million from 2007/08 - 2010/11; and • PRIF funding of $127 million from 2008/09 - 2011/12. • PRIF supports both new investments and maintenance of existing assets through assistance for long-term planning and budgeting that considers the impact of recurrent costs (through whole-of-life costing).