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The Right to Trade

Rethinking the Aid for Trade Agenda

image of The Right to Trade
Aid for trade is a fixture in the development landscape, accounting for approximately 25 per cent of total ODA, and is being positioned as a building block in the future development agenda beyond the 2015 expiry of the Millennium Development Goals.



In The Right to Trade, Nobel Prize-winning economist Joseph E Stiglitz and Andrew Charlton argue that aid for trade has not delivered on its initial promise.



To create a genuinely pro-development trade liberalisation agenda, the authors propose that a ‘right to trade’ and a ‘right to development’ be enshrined within the WTO’s dispute settlement system; and that aid for trade funds be consolidated into a coherent and predictable framework, where dedicated funds are committed by rich countries to a Global Trade Facility and dispersed through a transparent and competitive process.



Together these proposals would help ensure that international trade works for developing countries and will help preserve a development-friendly multilateral trading system.

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From ‘Trade Not Aid' to ‘Aid for Trade'

The institutions of the modern multilateral trading system were established at a time of relative, albeit far from uniform, consensus about the relationship between trade liberalisation and development. Tariff reduction was widely understood to have a clear and positive effect on trade flows. Trade flows were deemed to be positively associated with economic growth. And trade-induced growth was believed to enhance general welfare. Armed with these supposed certainties, developed and developing countries were emboldened to embrace the liberalisation of global trade. The Uruguay Round was struck and the World Trade Organization was born.

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