The Missing Link: Private Sector Involvement in Aid for Trade

On Tuesday, the U.S. Chamber of Commerce and the World Bank hosted an event, Building Capacity for Trade in Developing Countries: Fostering Public and Private Cooperation in Aid for Trade. Supporting organizations included MFAN Partner the U.S. Global Leadership Coalition, the Trade, Aid, Security Coalition, the Business Civic Leadership Center and the Business Council for Global Development. Tom Donohue, President of the Chamber, noted that more than half of US exports go to developing countries and reaffirmed the Chamber’s commitment to doubling US exports over the next 5 years, in support of Obama’s National Export Initiative (NEI).

The Aid for Trade (AFT) agenda was officially launched at the World Trade Organization’s Hong Kong Trade Ministerial meeting back in 2005. According to MFAN Co-Chair Jim Kolbe who moderated the first panel with Pascal Lamy, Director-General of the World Trade Organization and Robert Zoellick, President of the World Bank Group, there are 4 main components of aid for trade: technical assistance, infrastructure building to link markets, productive capacity and adjustment assistance. In the private sector, the aid for trade agenda is often referred to as value chain management or sustainable management. In other words aid for trade is official development assistance for building developing countries’ capacity for trade. Lamy noted that the increased political energy around aid for trade has led to more funding for trade capacity building in developing countries over the past several years. He also said there has been progress in making sure developing countries better streamline their trade and development policies and identify clear priorities. Lamy emphasized the need for countries to “own” their priorities and for donors to match their requests – a concept many in our community know as country ownership. As for areas of improvement, Lamy said there need to be more impact assessments that can in turn help make the case that public funds for trade capacity building are a good investment. Finally, he noted that businesses are more or less focusing on the same agenda but there is not a strong connection between the official AFT agenda and the private sector.

Zoellick described the World Bank’s role in capacity building in 3 main ways: improving the overall competitiveness in countries (policy context), finding ways to help cut the costs (both hard and soft infrastructure), and through trade finance. He said it is important for multilaterals to recognize when they can play a supportive role in helping build coherence among the many players, identifying gaps, and supporting the developing countries’ role in the “driver’s seat.” Zoellick built on Lamy’s point about the importance of impact assessments and said that all across the field of development we are looking to connect with the results agenda, and this is a critical  component.

The high level panel was followed by brief presentations by 6 major companies – Cargill, FedEx, Google, IBM, Kraft Foods and WalMart – highlighting capacity building projects they are spearheading around the world, some focusing on telecommunications and logistics and others focusing on the promotion of intellectual property rights and innovation. John Murphy, Vice President of the Chamber, noted that bringing private sector voices into the AFT discussions along with multilaterals would be incredibly beneficial to all involved. The long term goal would be to transition from Aid for Trade to Investment for Trade.

Devry Boughner, the Director of International Business Relations for Cargill, shared their Global Food Safety Initiative (GFSI) where after a series of trainings, the companies involved would meet international certification standards in food safety and hygiene, and therefore could be competitive in the global marketplace. Boughner said that this process not only led to higher standards for food safety across the board, but led to cost efficiency in the supply chain. Chris Padilla, Vice President of Governmental Programs for IBM said trade facilitation is important to the bottom line and summed up his remarks in 2 words: “trusted partnerships.” Padilla talked about AEO’s or authorized economic operators. He said that through AEO’s, large volume importers can build special relationships with countries and their customs authorities leading to eligibility for faster clearance of goods.

Representatives from USAID, the State Department, the US Trade and Development Agency, and the Millennium Challenge Corporation were in attendance. This Chamber and World Bank event was a great first step leading up to the July 18-19 Aid for Trade Global Review in Geneva – over 260 case studies have already been collected and best practices will be shared. The goal of many of these case studies is to show that the sum is greater than all the individual parts, which will hopefully lead to better coordination and partnership with the private sector moving forward.

As Tom Donohue said when he opened the afternoon’s event, “There have never been so many opportunities for business and government to break down barriers to trade as now.”

Click here to watch a webcast of the event.

You Might Also Like