Aid for Trade: Supporting Trade Preference Reform

Center for Global Development Working Paper No. 224

18 Pages Posted: 20 Oct 2010  

Susan Prowse

Government of the United Kingdom - Department for International Development (DFID); International Monetary Fund (IMF)

Date Written: September 28, 2010

Abstract

Aid-for-trade programs can help strengthen low-income countries’ supply capacity and knowledge of trade preferences, which will allow them to take fuller advantage of these preferences. Aid for trade to support preference reform can be divided into three categories: (i) creation of information-sharing mechanisms to ensure that governments, SMEs and other businesses are aware of the opportunities that preferential market access offers; (ii) capacity-building support to overcome supply-side and policy constraints; and (iii) support to ease the adjustments to preference erosion that will inevitably occur.

As with other aid initiatives, coordination and cohesion among assistance programs is critical for success. Delivery mechanisms such as the Enhanced Integrated Framework (EIF), the Trade Facilitation Facility (TFF), and the Standards and Trade Development Facility (STDF), are aimed at facilitating such coordination, but more could be done.

And, as preference programs are intended to be temporary, aid for trade can also facilitate graduation from these programs and compensate beneficiaries for preference erosion. Unfortunately, this area is still lacking the level of innovation and financial support needed.

Keywords: aid effectiveness

Suggested Citation

Prowse, Susan, Aid for Trade: Supporting Trade Preference Reform (September 28, 2010). Center for Global Development Working Paper No. 224. Available at SSRN: https://ssrn.com/abstract=1694144

Susan Prowse (Contact Author)

Government of the United Kingdom - Department for International Development (DFID)

1 Palace Street
Warwick CV34 4RA
United Kingdom

International Monetary Fund (IMF)

700 19th Street NW
Washington, DC 20431
United States

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