Weekly Trade Spotlight

Greater private sector involvement in Aid for Trade

Anna Mae Tuazon. 21 May 2012

The concept of Aid for Trade (AfT) puts together two key concepts: foreign development assistance, which targets the public sector, and trade, which is largely a private sector activity. On paper, there is no tension between public and private trade interests. But in practice, private sector involvement in the design or implementation of AfT activities remains limited.

At the 5th Regional Technical Group (RTG) meeting on AfT in Asia and the Pacific in Seoul (May 2012), both RTG members and its Co-chairs from Japan and Cambodia agreed that encouraging more interaction with the private sector is the most critical emerging issue of AfT in Asia and the Pacific.

Greater private sector involvement in AfT can come in various forms. Some approaches include the following:

• Private sector can build in trade-related training and capacity-building programs into their current corporate social responsibility strategy.
• It can likewise participate more actively in co-financing public-private partnership infrastructure projects.
• Firms can also can share their relevant trade experiences and help efficiently collect or provide AfT data to governments and international institutions to help monitor and evaluate outcomes and impact more effectively.

However, attracting support for greater private sector involvement in AfT is a daunting task. It should be made clear to the private sector how their support for AfT will figure in their business’ bottom line. There needs to be a compelling motivation for them to act.

For its upcoming second report, the RTG members have agreed to make private sector involvement in AfT the report’s centerpiece supporting other initiatives like greater South-South cooperation, interregional trade, regional integration, and support for vulnerable economies. Following the comprehensive stock-taking of information on AfT flows and initiatives in the first RTG report, it will be interesting to find out what specific policy lessons the second report will highlight. The report is due to be distributed before the 4th Global Review of AfT on July 2013 in Geneva.

About Aid for Trade and the RTG for Asia and the Pacific

Aid for trade refers to forms of assistance for developing countries specifically targeted at helping develop their capacity to trade. Following the recommendations from the 1st Global Review of Aid for Trade by the World Trade Organization, the RTG was formed to provide an informal regional forum for discussing AfT issues and proposals, sharing good practices, collecting and conducting analytical work on AfT, and building partnerships among actors and stakeholders specific to the Asia and the Pacific region.

For more information see:

First RTG Co-chairs Report “Aid for Trade in Asia and the Pacific: Its Role in Trade-Driven Growth” (2012)

World Trade Organization – Aid for Trade page