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Trade and development
Despite systems of tariff preferences and a professed openness to trade, trade liberalisation has not really delivered the expected results. The gains stemming from liberalisation are unequally distributed, and the least advanced countries are falling further behind in terms of competitiveness. For some developing countries, integration into the global market is at a standstill, and there has been no great inflow of foreign direct investment, despite considerable efforts by governments to attract FDI.
Appropriate support for trade liberalisation could help to ease these countries’ integration into world markets. Such “aid for trade” takes a variety of forms, including support to both productive and analytical capacity. The reason for these countries’ low export capacity lies more in insufficient production capacity than in problems of market access. These countries are also structurally lacking in capacity for trade policy analysis (knowledge of market opportunities, awareness of the economic, social and environmental impacts of trade agreements, etc.). As a logical consequence of their poor understanding of trade issues, developing countries do not regard trade as a development tool. Their reluctance to commit themselves leads them to conclude trade agreements belatedly, and not necessarily in line with their macroeconomic, fiscal and sectoral policies. The agreements eventually signed are inappropriate and their implemention relatively slow. Strengthening the analytical capacity of developing countries would not only enable countries and regions to improve their positioning on local, regional and global markets, but also allow better targeting of beneficiaries and rehabilitate the link between trade and poverty reduction. The need for analytical capacity building was explicitly mentioned in the opening declaration of the Doha Round in 2001.
Aid for trade should also help developing countries to adapt to the new challenges of international trade: increasing regionalism and bilateralism, the importance of non-tariff barriers, rising agricultural prices, increasingly volatile commodity prices, etc.
AFD is a major presence in the French aid-for-trade landscape. Its operational departments support trade capacity upgrading and capacity building programmes designed to help countries meet the challenges of competitiveness. For strategic reasons, AFD also supports efforts towards long-term analytical capacity building in developing countries: it is cooperating closely with the UN Economic Commission for Africa to help establish a network of African trade policy experts.
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