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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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Introduction

The World Trade Organization’s ‘aid for trade’ initiative was launched at the 2005 Ministerial in Hong Kong to recognise the disadvantage of developing countries participating in the global trading system, and bolster the development dividend of the flailing Doha Round. Seven years since the birth of the aid for trade initiative, huge resources have been mobilised. Fully 25 per cent of total ODA is now channelled, or at least labelled, as aid for trade (OECD and WTO 2011). Yet questions remain as to whether the coming together of aid and trade has delivered on the promise of additional resources for developing countries. If aid for trade has not been truly incremental to existing aid commitments, there is the further question: has the changed focus made aid more or less effective, resulting in stronger growth or reduced poverty?

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