Aid for trade is working

Page 22 

International trade is a key driver of development. But high trade costs prevent a large number of developing countries from fully exploiting the opportunities that the global market offers: increased development, stronger growth and more jobs.

Landlocked, remote, and small economies are marginalised by costs that reflect geography, not capability. Indeed, while producers in low-income countries are often competitive at the farm and factory gate, they are priced out of the international market. This is because of cumbersome border procedures, poor infrastructure, lack of finance, and complex standards.

This is exactly why we launched the Aid-for-Trade Initiative: to help developing countries build their supply-side capacities and overcome the constraints that prevent them from connecting to global markets.

The good news is that we are making progress. Since the start of the initiative 10 years ago, donors have disbursed US$264.5 billion in financing for aid-for-trade programmes, with annual commitments now standing at $55 billion. A further $190 billion in other official trade-related flows have been disbursed, while south-south trade-related support is also helping developing countries reduce high trade costs.

But it is not just about the numbers. It is about the jobs created, increased domestic and foreign investment and, ultimately, better lives for men and women across the globe. The OECD found that $1 in aid for trade generates $8 in extra trade for all developing countries and $20 for low income countries. These are impressive returns on investment!

And let’s not forget that aid for trade is a complement, not a substitute, for broader market liberalisation. That is why the WTO’s 161 members made a renewed commitment to open international trade to developing countries with the agreement of the Bali package almost two years ago.

The WTO Trade Facilitation Agreement (TFA) creates a significant opportunity to reduce trade costs and enhance participation in the global value chains. Making improvements in trade facilitation is possibly the policy reform with the greatest potential to impact on foreign input sourcing decisions.

At the OECD, we calculated that the implementation of the Trade Facilitation Agreement could reduce worldwide trade costs by up to 17.5%. And for those that do more, the benefits are even greater! Countries that implement the TFA in full will reduce their trade costs by up to four percentage points those that do only the minimum that the TFA requires.

Aid also has a key role to play in assisting countries with the implementation of the Trade Facilitation Agreement. Donors that report to the OECD have already disbursed some US$1.9 billion in aid for trade facilitation since 2005. Annual commitments now stand at US$668 million; an eight fold increase in donor support since 2005. And, according to the OECD-WTO survey, even more support is on its way!

The OECD has also developed Trade Facilitation Indicators, covering 152 countries, which can assist with the implementation of the TFA agreement. This tool allows countries to monitor and benchmark their trade facilitation performance, prioritise areas for action and mobilise technical assistance and capacity building in a targeted way.

Finally, let me remind you that we must join forces with the private sector if we are to see trade costs cut. Not only can they help identify the most distorting trade costs and suggest how best to reduce them, but they can also advise on the effective use of different development finance instruments offered by a wide range of providers.[…]

The OECD is committed to joining forces with governments, international organisations and the private sector to raise the bar for development. I firmly believe that reducing trade costs through trade facilitation and aid for trade should be a crucial pillar of international efforts under the Sustainable Development Goals. We are making progress, so let’s keep up the good work! […]

*Extract from speech delivered to launch the joint OECD/WTO report, Aid for Trade at a Glance: Joining forces to reduce trade cost for inclusive and sustainable growth, 30 June 2015. See

©OECD Observer Special offprint, July 2015

Economic data

GDP growth: +0.6% Q3 2017 year-on-year
Consumer price inflation: 2.3% Dec 2017 annual
Trade: +4.3% exp, +4.3% imp, Q3 2017
Unemployment: 5.5% Dec 2017
Last update: 12 Feb 2018


Stay up-to-date with the latest news from the OECD by signing up for our e-newsletter :

Twitter feed

Suscribe now

<b>Subscribe now!</b>

To receive your exclusive paper editions delivered to you directly

Online edition
Previous editions

Don't miss

  • Ambassador Aleksander Surdej, Permanent Representative of Poland to the OECD, was a guest on France 24’s English-language show “The Debate”, where he discussed French President Emmanuel Macron’s speech at the World Economic Forum in Davos.
  • The fight against tax evasion is gaining further momentum as Barbados, Côte d’Ivoire, Jamaica, Malaysia, Panama and Tunisia signed the BEPS Multilateral Convention on 24 January, bringing the total number of signatories to 78. The Convention strengthens existing tax treaties and reduces opportunities for tax avoidance by multinational enterprises.
  • Rousseau
  • Do you trust your government? The OECD’s How's life 2017 report finds that only 38% of people in OECD countries trust their government. How can we improve our old "Social contract?" Read more.
  • Papers show “past coming back to haunt us”: OECD Secretary-General Angel Gurria tells Sky News that the so-called "Paradise Papers" show a past coming back to haunt us, but one which is now being dismantled. Please watch the video.
  • When someone asks me to describe an ideal girl, in my head, she is a person who is physically and mentally independent, brave to speak her mind, treated with respect just like she treats others, and inspiring to herself and others. But I know that the reality is still so much different. By Alda, 18, on International Day of the Girl. Read more.
  • Globalisation’s many benefits have been unequally shared, and public policy has struggled to keep up with a rapidly-shifting world. The OECD is working alongside governments and international organisations to help improve and harness the gains while tackling the root causes of inequality, and ensuring a level playing field globally. Please watch.
  • Read some of the insightful remarks made at OECD Forum 2017, held on 6-7 June. OECD Forum kick-started events with a focus on inclusive growth, digitalisation, and trust, under the overall theme of Bridging Divides.
  • Checking out the job situation with the OECD scoreboard of labour market performances: do you want to know how your country compares with neighbours and competitors on income levels or employment?
  • Trade is an important point of focus in today’s international economy. This video presents facts and statistics from OECD’s most recent publications on this topic.
  • The OECD Gender Initiative examines existing barriers to gender equality in education, employment, and entrepreneurship. The gender portal monitors the progress made by governments to promote gender equality in both OECD and non-OECD countries and provides good practices based on analytical tools and reliable data.
  • Interested in a career in Paris at the OECD? The OECD is a major international organisation, with a mission to build better policies for better lives. With our hub based in one of the world's global cities and offices across continents, find out more at .
  • Visit the OECD Gender Data Portal. Selected indicators shedding light on gender inequalities in education, employment and entrepreneurship.

Most Popular Articles

OECD Insights Blog

NOTE: All signed articles in the OECD Observer express the opinions of the authors
and do not necessarily represent the official views of OECD member countries.

All rights reserved. OECD 2018