UK’s Aid for Trade Strategy Claire Durkin Director, Europe, International Trade & Development UK Government
Feb 25, 2016
UK’s Aid for Trade Strategy
Claire DurkinDirector, Europe,
International Trade & Development
UK Government
“Free trade, one of the greatest blessings which a Government
can confer on a people, is in almost every country
unpopular”
Thomas Macaulay, 1824
For Growth and Development
• Trade and Investment• Economic policy• Development policy• International relations• International and internal scrutiny• Labour standards• Environmental policies
“Everything is connected to everything else”Albert Laszlo Barabasi
Trade and Investment
• Erodes “Import” “Export” bi-polars• Challenges RTAs• Not an option e.g.
India’s 11th 5 year plan: Infrastructure investment must rise from 5% GDP (06-07) to 9% (2011-12)
Global FDI and Trade
Increasing Stock in World FDI and Trade Flows
0
2,000
4,000
6,000
8,000
10,000
12,000
14,000
1995 1997 1999 2001 2003 2005
World stock of FDI
Annual world trade
$bn
The Present
Average developed world tariffs• 1.7% goods• 5% agricultural products
Average developing world tariffs• 6.4% goods• 13% agricultural products
NTBs, Regulatory barriers.
“Protect” “Nurture” “Defend”
Reducing Poverty
Developing countries share of trade rises as Developing countries share of trade rises as
global integration intensifies…global integration intensifies…
0
5
10
15
20
25
30
1980 2005 2030
US$2001 trln.
Source: World Bank simulations with Linkage model; GEP 2007.Source: World Bank simulations with Linkage model; GEP 2007.
Exports from developing and developed countries, 2005-2030Exports from developing and developed countries, 2005-2030
Developing countries
High-income countries
$27 trln
32%
45%
22%
Structure is changing: Structure is changing: South as source of demandSouth as source of demand services services
the Good, the bad and the Ugly
• UK’s North Sea policy
• EU Common Agricultural policy
• British Empire’s cotton policy.
UK Aid For Trade Strategy
Increasing capacity within developing countries to trade and integrate successfully into the global economy whilst easing the costs of adjustment
The Challenges
• Cutting transport costs• Upgrading trade-related
infrastructure• Increasing regional trade &
integration• Expanding, diversifying & adding
value to agric & manufacturing• Improving trade & investment climate• Managing adjustment
High Transport Costs
• Trucks at the Petrapole–Benapole border between India and Bangladesh 10 days – fruit/ vegetable exports for poor producers
• Transport costs in East Africa on average 80% higher than USA & Europe
• It costs as much to move a freight container from Mombassa to Kampala as it does from Mombassa to Shanghai
• In Rwanda, the average import procedures124 days.
OECD average 12 days.
Regulatory Frameworks
• In South Asia, existing bilateral transit agreements and regulatory frameworks for cross border and rail transport prohibit best route to market
• Lack of transit rights through Bangladesh: India’s North Eastern states’ trade additional 1,300 km to a journey from Calcutta to Agartala.
Bariers to Regional Trade
• Regional trade 5% in Africa, 46% in NAFTA, 55% in East Asia and 62% in the EU
• Internal barriers, weak infrastructure inter-connectivity and high transport costs – in South Asia, barriers are also strongly political
Reduced border delays & faster movement goods
• (COMESA), the East African Communicty (EAC) and the Southern African Development Community (SADC) Regional Aid for Trade initiative, cut transport costs along North South Transport Corridor (DRC to Tanzania and DRC to South Africa) by 10% by the end of 2009
• Zambia and Zimbabwe One Stop Border Post in Africa at the Chirundu border. Setting up a OSBP between South Africa and Mozambique, and has been asked to support five more
• Trade Investment Facility in Lesotho, the One Stop Shop, export applications processed in 15 minutes rather than 7 days. Exporters fill in 2 pages of forms instead of 23.
Improved customs performance
Rwanda reduced transit times and improved revenue collection.
• Revenue Authority nearly tripled tax revenue over five years, despite falling tax rates
• Increase in poverty reduction expenditure from 5.3% of GDP in 2001 to 10.1% of GDP in 2005
Increased exports & income
• Regional Trade Facilitation Programme (RTFP): Southern Africa increase exports of nuts, tea and coffee by 1500 tonnes (2006-7
• Licensing programme secures trademarks for Ethopia’s fine coffee brands in 28 countries.
Productivity and Standards
• Lesotho, ComMark programme to enhance productivity in garments industry; employment of 50,000 people.
• In Bangladesh, compliance with labour and health standards: 600 factories have completed audits improved productivity a 14% increase in sales turnover of assisted companies
• Fisheries export in Mozambique supports 70,000. Regional Standards Programme helped maintain EU standards accreditation
UK AFT COMMITMENTS
Strategic Objectives
• Build countries’ capacities to trade through growth & competitiveness strategies
• Ensure trade results in poverty reduction & inclusive growth
• Facilitate regional trade & integration, and ensure that EPAs are beneficial for the ACP
• Build an international system that delivers more and better AFT
… THEMATIC ALLOCATIONSUK Aid for Trade expenditure profile 2008 -13
Trade policy & regulations (including
trade facilitation, customs
modernisation, regional integration
15%Economic infrastructure
(including ICA, IPPF, EIB Trust Fund and contributions via
multilaterals)45%
Productive capacity building and adjustment
(including private sector development,
investment climate and trade development)
40%
… Geographical SpreadUK Aid for Trade geographical spread
Africa55%
Rest of the World15%South Asia
30%
Deliverables• Delivery of EU G8 AFT spending targets - $4 billion per year and €2
billion per year by 2010
• A successful EIF up and running and delivering real trade-related technical assistance and support to LDCs. Contribution of £38 million over five years with £15.5 million over the first two years
• Concrete plans and support for a 2nd phase EIF covering non-LDC, IDA-only countries by end of CSR period
• A robust global monitoring framework on AFT (global indicators, regular reports, annual global WTO-led review, best practice, etc.), developed jointly with the OECD, World Bank, WTO, RDBs and other donor partners.
Delivery Challels
• Programmes in countries and in regions • Core contributions to multilateral partners• Multilateral trust funds • International partnerships
Think tanks, NGOs and academia • International agencies • Regional economic and integration
institutions
UK Spend through Multilaterals
April 2008 – March 2011:
£1.15 billion (70% of overall UK spend)
• £676 million to EU.• £472 million to World Bank and R.D.Bs.
“Multilat is Hell”Victoria Nuland, quoted by Strobe Talbott
Victoria Nuland, quoted by Strobe Talbott
Managing Multilateral Funding
SymphoniesQuartetsSonatas
but who holds the baton?
COUNTRIES MUST
CODA• Aid for Trade to enable developing
countries benefit from economic climate.
• Our challenge as leaders, as trade negotiators, as Governments, as economists, is to change the economic climate.
• Never Take Open Markets For Granted
AlgeriaLibyaMorocco MauritaniaTunisia
AMU
GhanaNigeria Cape Verde
Gambia
ECOWAS
Benin NigerTogo Burkina FasoCote d’Ivoire
Conseil de L’Entente
Guinea-Bissau Mali Senegal
WAEMU
Liberia Sierra Leaone Guinea
Mano River Union CLISS
CameroonCentral African Rep.GabonEquat. GuineaRep.Congo
Chad
Sao Tomé & Principe
ECCAS
CEMAC
Angola
Burundi*Rwanda*
Egypt
DR Congo
DjiboutiEthiopiaEritreaSudan
Kenya*Uganda*
Somalia
Tanzania*
EAC
South AfricaBotswanaLesotho
Namibia*Swaziland*
Mozambique
SACU
Malawi*Zambia*Zimbabwe*
Mauritius*Syechelles*
Comoros*Madagascar*
Reunion
IOC
*CBI
SADC
COMESA Nile River Basin IGAD
AMU: Arab Maghreb UnionCBI: Cross Border InitiativeCEMAC: Economic & Monetary Community of Central AfricaCILSS: Permanent Interstate Committee on Drought Control in the SahelCOMESA: Common Market for Eastern and Southern AfricaEAC: East African CooperationECOWAS: Economic Community of Western African StudiesIGAD: Inter-Governmental Authority for GovernmentIOC: Indian Ocean CommissionSACU: Southern African Customs UnionSADC: Southern African Development CommunityWAEMU: West African Economic & Monetary Union
Overlapping African agreements…Overlapping African agreements…
BilateralsWe give advice but we do not influence
people’s conduct ”Rochefoucauld
• Baldwin – making RTAs mutually compatible
• Model FTAs• Role of WTO
Multilaterals
DOHA DEVELOPMENT
ROUND
Future World Trade Rounds
Movement of Capital
Movement of Labour
Development, Standards, Climate Change = Global Responsibility
To move from Georgics to Aeneid
Ever the Optimist
It moves, all the same.
Galileo