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World Bank Group President Announces More Aid For Trade

November 20, 2007

GENEVA, November 20 – World Bank Group President Robert B. Zoellick announced expanded efforts on trade to help countries take advantage of the global market to accelerate economic growth and overcome poverty. He also called on countries to complete negotiations of the Doha round to open markets for the world’s poor.

“I believe there is a good deal on the table, but all the parties in the Doha round will have to focus on solving problems, not pointing fingers,” said Zoellick during the Aid for Trade Meeting of the World Trade Organization (WTO), taking place in Geneva, Switzerland.

“To promote inclusive and sustainable globalization, countries need to bring down trade barriers to the products poor people produce,” he said. “But market access is not enough. Aid for trade is also a critical part of this picture in order to help countries integrate into and benefit from global markets – and take advantage of any new market openings.”

Zoellick said that development assistance should be made available to countries undertaking reforms to lower their costs of trading and use exports for growth, and that the World Bank Group is increasing its development support to trade activities.

“Globalization can only work if all countries participate,” Zoellick said. “New trade opportunities cannot be the province solely of the major trading nations, nor can the benefits within countries be concentrated solely in the hands of a privileged few, without risking a backlash that threatens to unravel global integration and all that it promises.”

According to the World Trade Organization (WTO) and Organization for Economic Cooperation and Development (OECD) the World Bank Group provided aid for trade averaging some US$3.1 billion a year to low income countries over the period 2002-2005. The WTO/OECD estimates on aid for trade include lending for infrastructure (energy, telecommunications and transport). Work is ongoing to refine the measurement of aid for trade.

Zoellick announced several areas for additional trade-related efforts by the World Bank Group (WBG). These areas include:

  • Increased support to country programs on trade and competitiveness, including policy analysis, lending and technical assistance.
  • More resources for trade-related infrastructure.
  • Expanded programs for financing trade through the Bank’s private sector arm, the International Finance Corporation (IFC).
  • Expanded assistance in trade facilitation, including logistics, transport and supply chains.
  • More investments in training and capacity building for policy-makers, particularly in low-income countries. .
  • Greater work on tools to help countries analyze trade obstacles, as well as indicators comparing countries, such as the recently released Logistics Performance Indicators, to guide policy makers to areas in need of improvement. These tools will be made freely available to all countries.
  • Further development of knowledge on how to harness globalization for growth and overcoming poverty, and to inform key trade policy debates.

Zoellick said the exact amount of the increase in trade-related activities provided by the WBG will depend on country demand, and on whether countries make trade a priority part of their development strategy. Moreover, he indicated that a successful replenishment by donor countries of the International Development Association (IDA), which is the part of the WBG that provides interest-free loans and grants to the poorest nations, will also determine how much additional resources will be available for aid for trade.

“For the poorest countries, a successful replenishment of IDA 15 will be critical in delivering increased aid for trade, including for regional projects,” said Zoellick.

Beyond lending, the Bank currently provides an extensive program of trade-related assistance for both low- and middle-income countries. Over fiscal year 2006-07, the Bank held an average of 48 trade-related training courses a year (around 14,000 participant training days a year), conducted an average of 36 trade-related technical assistance activities a year, and produced an average of 79 pieces of trade-related policy analysis a year at the request of client countries. Countries in Africa were the major clients.

In addition, the IFC’s Global Trade Finance Program (GTFP) has helped local banks in developing countries support their small and medium-sized exporters and importers. It facilitates access to trade finance by offering payment guarantees to a growing network of international trade banks expanding their services to an increasing set of emerging markets. The GTFP operates under a revolving limit of US$1 billion and currently can provide payment guarantees to 87 banks in 48 developing countries. Within two years it has already backed almost $2 billion in trade. The GTFP provided US$770 million of guarantees in fiscal year 2007 and is set to increase to US$1.3 billion in FY08. In four years it is planned to almost double to $2 billion a year and to double the number of partner banks to 260. Banks in Africa were the major recipients of support under the program, followed by clients in Latin America and the Caribbean, the Middle East, Europe and Asia. The GTFP also runs an advisory program for participating banks to build skills in trade finance. To date it has trained 227 bankers from 120 banks across 65 countries in Africa and Latin America.

Media Contacts
In Geneva
Selina Elizabeth Jackson
Tel : (4122) 748-1010
In Washington
Alejandra Viveros
Tel : (202) 473-4306