The Enhanced Integrated Framework Regional AsianWorkshop Kathmandu 21-23 June 2010

1. The Enhanced Integrated Framework Regional AsianWorkshop Kathmandu21-23 June 2010

2. Aid for Tradeand The EIF Ravi Bhattarai Deputy Permanent Representative Permanent Mission of Nepal Geneva

3. EIF And Aid for Trade • Concepts • Similarities • Interlinks • Differences • Challenges • Case Study Nepal • Conclusion

4. ConceptsWhat is IF ? • IF is an aid for trade partnership in action for the LDCs. Through the IF partnership, LDCs combine their efforts with those of the Donors, Core Agencies and other development partners to respond to their trade development needs so that they can become full and active beneficiaries of the multilateral trading system.

5. ConceptsAid for Trade • Aid for Trade is a new Slogan confined to assist all developing countries to develop their capacity to trade by removing supply side constraints and enhancing their productive capacity and competitiveness. • It is part and parcel of normal programmable ODA (grants and concessional loans). In fact, each year around a fifth of ODA is dedicated to building supply-side capacity in developing countries. • There is no new funding mechanism involved. Existing mechanisms are being used by multilateral, regional and bilateral donors to disburse ODA in trade specific area

6. SimilaritiesIF first incarnation of A4T • In response to the complexity of LDCs' trade-related problems, the Integrated Framework (IF) was initiatedin October 1997 at the WTO High Level Meeting on Integrated Initiatives for Least-Developed Countries' Trade Development. • Drawing from its experiences in its first years, the IF was first restructured in 2000.

7. Similarities.. IF first incarnation of A4T In 2005, because of meagre participation of the LDCs and the less effective implementation, the IF program was reviewed with the aim to enhancing the delivery of measurable results. This led to the implementation of current Enhanced IF in July 2009. EIF & A4T born together in HKMD: The Sixth WTO Ministerial Meeting decided to form two task forces to expand the present IF to EIF and to visualize A4T initiative. As the outcome of the reports of these two task forces currently both the mechanism are in place.

8. Similarities..EIF & A4T: Implementation • Pre DTIS: Phase I • An official request from the country to participate in the EIF process after an awareness-building exercise with respect to the importance of trade for development; • a technical review of the request; • the establishment of the National IF Steering Committee; and, to the extent possible, • the identification of a Donor Facilitator.

9. Similarities..EIF & A4T: Implementation DTIS: Phase II • The conduction of DTIS. Post DTIS: Phase III • Finally, follow-up activities start with the translation of the diagnostic phase’s findings into the elaboration and validation of an action plan, the Action Matrix, and its integration into the national development strategy.

10. Similarities..EIF & A4T: Implementation • Phase IV A4T. • The Action Matrix serves as the basis for trade-related financial and technical assistance delivery, in partnership with the development cooperation community under the A4T Mechanism.

11. Interlinks • EIF is a necessary condition for A4T. It complements A4T, and does not substitute it. • EIF, through DTIS, smoothens the access to and ensures A4T. • Supported by the overarching principle of country ownership, the EIF’s structures and processes form building blocks available to LDCs to operationalize A4T.

12. Differences between EIF & A4T • EIF for LDCs only: Considering the difficult situation of LDCs, their poor contribution to world trade and the pervasive poverty, EIF Mechanism was developed exclusively for them only. On the contrary, A4T is for all developing countries. • EIF mainly a multilateral process: The EIF Mechanism is run by multilateral process. The EIFES, EIF Board and EIFSC are at the helm of process. In all these EIF organs the WTO Members play dominant role.

13. Differences.. • However, a small component of EIF is bilateral in nature as the development partners at the local level used to apportion small amount of resources under EIF Funding and they allocate it under bilateral agreement. • Aid for Trade is basically a ODA process between the development partners and the recipient countries. WTO plays a role in monitoring and encourages members to increase the resources.

14. Differences.. • EIF Trust Fund: The EIF Mechanism has created a trust fund which is sponsored by development partners and the fund is spent to develop the trade related basic infrastructure of LDCs, such as creation of public awareness, DTIS or NTIS Study, mainstreaming trade into national development plans and to some extent implementation of DTIS Action Matrix list. However, A4T Mechanism does not conceive any such International Fund.

15. Differences.. • EIF has limited scope: EIF has been defined as a vehicle for Aid for Trade mechanism. It is confined to awareness activities, capacity building , conduction of DTIS and mainstreaming trade into national development strategy. Although, it can assist to implement limited number of high priority small projects, the overall responsibility of implementing Action Matrix lies with A4T. A4T contributes to remove supply side constraint, develop productive capacity, build trade related infrastructure and others.

16. Differences.. EIF Funding • EIF Trust Fund: All Tier 1 projects are funded as demanded, limited funding for Tier 2 proposals. • Mobilization of Local, Regional and Multilateral Donors’ EIF Fund: Limited funding for both Tier 1 & Tier 2 proposals

17. Differences..A4T Funding • Mobilization of Local Regional and Multilateral ODA: The bulk of the activities identified in the Action Matrices under Tier 2 will be funded by local, regional or multilateral donors active in the respective EIF beneficiary LDC.

18. Challenges • Enhanced LDCs ownership: The LDCs should have greater say in the process and the process should be demand driven not supply driven as is said it to be now. In this regard the development partners should show flexibility to respect the ownership of recipient countries.

19. Challenges • Effective use of available resources: All the stakeholders, particularly the recipient countries should be more responsible for the optimum utilization of available resources so that best results could be achieved and a pressure could be built upon the development partners to increase their support. • Enhanced coordination among all the stakeholders: A better coordination is required among all the stakeholders, i.e. recipient countries, development partners, private sector and the civil society for the optimum use of resources and to achieve best results

20. Challenges • Increased and predictable future resources: The major challenge, at the moment when several crises has affected the global economy, particularly the LDCs, is to ensure the increased and sustainable resources for future. • Ensured funding for implementation of DTIS Action Matrix priorities: Although conceptually a link between DTIS Action Matrix and EIF & A4T Funding has been created, there is no certainty that the fund will be available. In this regard, a mandatory provision should be created to ensure funding for such activities.

21. Challenges • Expansion of scope of EIF to cover at least medium sized projects: Keeping in view its ground based and effective mechanism the present scope given to EIF is too narrow. In this context, it will be beneficial to expand scope of EIF to cover at least medium sized projects from the Action Matrix. But it will be a challenging task as many development partners as well as some of the developing countries will also oppose this proposal.

22. Case Study NepalBackground • Active from the very beginning, particularly during the transformation of IF to EIF. • Conducted DTIS in 2004. • Completed NTIS. • Developments Plans from 1990s’ have referred to trade. • For last several years government has official Trade Policy.

23. Case Study Nepal..Government Action • Prioritize and validate the Action Matrix. • Mainstream them into upcoming 3 years national development plan. • Categorize the top priorities into two categories , i. e. EIF Funding and A4T Funding. • Coordinate with all the stakeholders including the private sector to implement them at the earliest. • Mobilize the development partners for assistance.

24. Conclusion • The EIF and A4T Mechanisms are not the ends in themselves but they are just means to the ends and poverty reduction by enhancing trade is the end. Therefore, we have a challenge to mobilize all these means effectively and efficiently to achieve the ultimate goal of poverty reduction. In this regard, the LDCs need to show greater commitment, facilitate better coordination among all the stakeholders, select pragmatic projects and to implement them efficiently and effectively. In the same way, the development partners need to show higher commitment to ensure increased and predictable funds for both EIF and A4T with simplified procedure.

25. Thank you For Your Kind Attention

26. EIFProgress at a Glance Update April 2010 • Number of LDC s Members involved 46 • Number of Development Partners involved 23 • Project Approved 20 • Pipeline Projects 30-40 • Validated DTIS Action Matrix lists 35

27. EIFProgress at a Glance • Total target of aid commitment by donorsUS$ 250 mi. • Actual Aid Commitment by donors at Stockholm Conference 2007 US$ 170 mi. Current update 183 mi. of which • Total transfer to UNOPS US$ 100 mi. • Maximum Fund Per Project 1.5 mi. • Time Period 3 years