By Andrew Lloyd, Aid for Trade Policy Manager, Office of Trade Negotiations
Aid for trade accounts for about 40 per cent of all aid funding to Asia and the Pacific and is integral to the region’s economic development. Aid for Trade is about helping developing countries to build the trade capacity and infrastructure they need to benefit from trade. It helps people in developing countries to participate in trade by making it simpler, faster and more inclusive.
For the past few years, we have been supporting the Asian Development Bank to report on aid for trade in our region (they recently released the 2017 report). The report focusses on improving connectivity for inclusive development, and offers ideas for how to address the challenges to trade that people in our region still face (for example, our Pacific island neighbours must negotiate vast distances to get their goods to market) and ensuring that the benefits of trade reach those who are socially vulnerable.
We can leverage technology to improve the inclusiveness of trade-driven growth. The rise of disruptive technologies, the rapid digitalisation of trade, and the growth of e‑commerce all offer opportunities for our ‘geographically challenged’ neighbours to increase trade and promote inclusive growth. Aid directed at the expanding trade in services – which are increasingly tradable as digital technology transforms business and logistics – is important.
Aid for trade can benefit socially vulnerable groups, including women. Internet access can be transformative in providing opportunities for small firms, often owned by women, to tap into previously inaccessible markets. Participation in global value chains generates more jobs for women when labour-intensive work in manufacturing is part of international production networks. Overall, the report estimates that a ten per cent increase in aid for trade is associated with about a two per cent increase in women’s labour force participation.
There is still much work to be done to create an environment for trade in developing countries: addressing expensive logistics and shipping costs; revising traditional customs procedures; addressing policy and regulatory issues that increase costs to digital companies; helping entrepreneurs and SMEs to adopt and use digital technologies. We will continue to focus our aid for trade efforts on addressing these challenges.