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Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs

Author

Listed:
  • Jaime DE MELO

    (Ferdi)

  • Laurent WAGNER

    (Ferdi)

Abstract

The Aid for Trade (AFT) initiative, launched in 2005 to help developing and especially the Least Developed (LDCs) countries integrate the rules of the World Trade System adopted in the Uruguay Round turned out to be more about mobilizing support for the stalled Doha Round negotiations. A decade later, a broadened AFT agenda has eluded effective evaluation. The recently concluded Trade Facilitation Agreement (TFA) provides an ideal opportunity to narrow the scope of AFT activities to heed the call for “managing for Development results” (MfDR). The paper reviews the evidence on trade costs distinguishing between Least Developed Countries (LDCs) and Landlocked LDCS (LLDCs). The paper also includes new estimates of time in transit for international parcel data that is measured relatively accurately. New estimates provide support for allocating a greater share of AFT funds towards LDCs and particularly towards LLDCs, both groups showing higher trade costs than comparators and less progress in reducing trade costs since 1995. On average, time in customs for imports and exports are also significantly higher for both groups than for their respective comparators. LDCs and LLDCs have systematically lower scores for the components in the new OECD Trade Facilitation Indicator (TFI). These new estimates suggest that a successful implementation of the TFA, defined as moving halfway towards the frontier value of the TFI for the respective country grouping could reduce trade costs for imports of LDCs by 2.5% and by 4.5% for LLDCs. Even though there is more to trade costs than customs management, monitoring implementation of the TFA would be part of the IPoA and a stepping stone towards the concrete trade performance targets that have lacked in AFT activities so far.

Suggested Citation

  • Jaime DE MELO & Laurent WAGNER, 2016. "Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs," Working Papers P153, FERDI.
    • Handle: RePEc:fdi:wpaper:2959
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    References listed on IDEAS

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    Cited by:

    1. Jaime DE MELO & Ben SHEPHERD, 2018. "The Economics of Non-Tariff Measures: A Primer," Working Papers P212, FERDI.
    2. Gnangnon, Sèna Kimm, 2023. "The Quality of Aid for Trade Flows and Economic Complexity," EconStor Preprints 271538, ZBW - Leibniz Information Centre for Economics.
    3. Jaime DE MELO & Laurent WAGNER, 2016. "Aid for Trade and the Trade Facilitation Agreement: What they can do for LDCs," Working Papers P153, FERDI.
    4. Jaime de Melo & Zakaria Sorgho & Laurent Wagner, 2021. "Implementing the Trade Facilitation Agreement (TFA): estimates of reduction in time at customs for the United Nations’ vulnerable economies," Working Papers hal-03461831, HAL.
    5. Abiola Abidemi Akinsanya, 2020. "Understanding the Role of Aid for Trade in Enhancing Corridor Development and Regional Integration in West Africa: Lessons and Policy Directions," Advances in African Economic, Social and Political Development, in: Gbadebo O.A. Odularu & Mena Hassan & Musibau Adetunji Babatunde (ed.), Fostering Trade in Africa, pages 183-211, Springer.
    6. Gnangnon, Sèna Kimm, 2023. "Effect of Aid for Trade on Recipient-Countries' Participation in Global Value Chains," EconStor Preprints 279713, ZBW - Leibniz Information Centre for Economics.

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    aid for trade;

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