Aid for Trade is Reaching its Limits, So What's Next?

What is it about?

The Aid for Trade Initiative has reached its limits and is in a need to be revamped. This article describes the political economy that led to the launch of the Initiative and explains why it focused on the mobilization of financial resources. The mobilization of resources has been impressive but, in the midst of a fiscal crisis and against the background of growing suspicion by developing countries, the Initiative is asked to show results. This proved difficult. As a result, in order to preserve resource mobilization and preserve donors’ interest, the WTO is expanding the scope of the Initiative to new areas only remotely related to the trade and growth nexus. This article argues that this is unlikely to address the main challenge that the initiative faces: building confidence. As confidence is crucial for the future of the Initiative and for the negotiation of a Doha Round agreement, the WTO should rather follow the suggestion of some donors to narrow the scope of the Initiative in order to make it more focus, monitorable, and efficient.

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