Twenty years have passed since the launch of the World Trade Organization (WTO) Aid for Trade Initiative. Developing economies and least developed countries (LDCs) now face an increasingly turbulent global trading system, a squeeze on finance and debt, and the mounting adverse impacts of environmental crises, not least climate change. Alongside the urgent need for trade rules and policy frameworks that better support resilience, economic transformation, and sustainable development opportunities for developing countries, this reality also calls for renewed dynamism and engagement in mobilizing the necessary financing, investment, and technical support. Aid for trade is one of the key vehicles for delivering on the partnerships this requires. We must ensure that it is fit for purpose and addresses tomorrow's trade needs—among which addressing sustainability considerations, managing environmental risks, ensuring competitiveness, and securing just transitions will be central.

Extreme weather events and changing climate conditions are causing billions of dollars in economic loss and damage across developing countries, and severe human suffering. At the same time, many communities in these countries are experiencing the loss of biodiversity and ecosystems which are the foundation for economic sectors—from fisheries to agriculture and tourism—on which hundreds of millions of people directly depend for their livelihoods. They are flooded with plastic pollution and waste with tremendous economic and health costs.

Faced with the huge social and economic toll of the triple planetary crisis—despite bearing the least historical responsibility for these crises—developing countries have repeatedly highlighted the need for international support measures, including through aid for trade, technological cooperation, and wider finance and investment, both to address their economic and trade-related impacts and to seize the opportunities arising from the transition towards more sustainable and resilient societies. Amidst the range of trade and development priorities that developing countries have identified as requiring enhanced support, a broad majority of countries have emphasized that sustainability concerns present a critical set of risks and opportunities that will shape their trade prospects and the ability to deliver better outcomes for their populations.

At the WTO’s Fourteenth Ministerial Conference (MC14), for instance, a broad range of ministerial statements underscored the importance of aid for trade in supporting developing countries to participate effectively in international trade and develop trade strategies to facilitate competitiveness, adaptation, and resilience in the context of accelerating impacts of the climate crisis and the push for more sustainable trade.

For example, in their Ministerial Declaration, the Organization of the African, Caribbean and Pacific (ACP) States, calls for improved and increased aid for trade “to better support sustainable trade” and the Least Developed Countries Group Ministerial Declaration emphasizes the need for reinforced support, including aid for trade “at a time when LDCs must adapt to the demands of digitalization, services, sustainability standards, and resilient supply chains.” In their Menu of Voluntary Actions issued at MC13, the Coalition of Trade Ministers on Climate, bringing together a diverse group of 60+ trade ministers, underline the importance of supporting developing countries, including through aid for trade, “to develop trade and climate strategies and policies, that support climate adaptation and fair and just transitions toward climate-resilient development.”

Together, these statements reflect recognition from a broad diversity of developing country governments of the devastating impacts that environmental crises are already having on their economies and trade and that both environmental risks and trade-related environment measures are relevant to the future of their trade. They also underscore that it will be vital for developing countries to equip themselves to shape and respond to the evolving regulatory frameworks, ensure competitiveness, seize new green market opportunities that can drive development and industrialization priorities, and ensure they have the institutional frameworks required so that they are not left behind or marginalized in the green transition. 

The 10th Global Review of Aid for Trade, which takes place in Geneva on 29-30 October, offers a critical opportunity to catalyse proactive engagement on how aid for trade partnerships can better support trade-related contributions and responses to these sustainability priorities of developing countries, especially LDCs, small island developing states (SIDS), and small, vulnerable economies (SVEs) that are most vulnerable to the impacts of environmental crises.

In the lead up to the 10th Global Review, Barbados and Australia have been leading on a proposed declaration marking the 20th anniversary of the initiative, which they hope to see adopted on the final day of the review. The declaration rightly calls for a recommitment to aid for trade, coupled with a repositioning from “Aid for Trade” to “Aid for Trade: Partnerships for Trade and Development” in recognition of the need for new forms of trade and development cooperation underpinned by partnerships, and to mobilize, attract, scale, and connect new sources of finance and investment to complement official development assistance resources. This declaration deserves broad support on the part of the membership and stakeholders, followed by concerted action to transform commitment to results. As work on this partnership approach advances, it will be crucial to ensure trade cooperation on sustainability issues is central to the agenda.

Here it is essential to recall the broad consensus that the economic burden of the global response to environmental challenges should not fall on the world’s poorest and most vulnerable economies, and that developed countries have a responsibility to provide financial resources, capacity building, and technical assistance to bolster capacities in developing countries. In the face of the grave mounting evidence of the economic and social impacts of these environmental crises on developing countries, the importance of collective action, bolstered partnerships, and just transitions is clear.

Despite numerous commitments to provide capacity building and technical assistance to developing and least developed countries on the interface of trade, environment, and sustainable development in a range of trade and environmental agreements, there are well-recognized shortfalls in the scale of financial and technical support relative to the challenges facing a broad diversity of developing countries, and especially LDCs, SIDS, and SVEs. It is also clear that—while remaining central—traditional sources of development finance have not been, and are not likely to be, sufficient.

In discussions at previous global reviews, developing countries have highlighted a number of ways that aid for trade could be harnessed to address their diverse national and regional needs and priorities for a just transition to sustainable trade. These include:

• Supporting economic diversification that promotes participation and competitiveness in green exports and sustainable supply chains.
• Boosting resilience, climate readiness, and adaptation in key export sectors.
• Building climate-smart and resilient trade-related infrastructure.
• Shaping and meeting sustainability requirements in export markets.
• Supporting access to relevant technologies, whether for decarbonization, clean energy transition, tackling plastic pollution, or promoting circular economy approaches in manufacturing.
• Developing national strategies and regional approaches to trade and sustainability, including to support institutional strengthening and cooperation on cross-cutting issues such as green customs and systems for measurement, reporting, and verification (MRV) on sustainability requirements.
• Supporting responses and recovery from the trade impacts of climate change and related natural disasters, including impacts on food crops, food security, and key export sectors, and ensuring access to emergency supplies.

To effectively support developing countries, it is clear that sustainable aid for trade will need to be grounded in wider national goals like structural transformation, economic diversification, employment creation, and poverty reduction. Moreover, aid for trade will never be effective without international trade rules and policy frameworks that address developing country priorities and constraints.

Advancing aid for trade partnerships that respond to sustainability considerations will require simultaneous action on six complementary pathways:

• Securing new and additional resources for sustainability-focused aid for trade partnerships, including by mobilizing additional sources of finance that can support sustainable trade.
• Fostering coherence between aid for trade and wider efforts to finance the shift to an environmentally sustainable global economy, including climate finance, development assistance, debt relief, and investment that supports the transformation and competitiveness of developing countries in a global green economy. Alongside ensuring supportive domestic policy frameworks, critical in this context will also be reform of the international financial architecture to align with and catalyse investment in sustainability and support developing countries and businesses to raise capital and attract investments in the green transition.
• Integrating trade considerations into existing climate and environmental funding initiatives and in development assistance for sectors with a high environmental impact and trade dimension.
• Strengthening South-South cooperation on sustainable and resilient trade, including by learning from developing country experiences and existing practices that support environmental sustainability in trade.
• Linking aid for trade partnerships more explicitly with technology cooperation initiatives.
• Mainstreaming sustainability goals in aid for trade planning and projects, and ensuring aid for trade monitoring systems accurately capture and report information about the sustainability purpose and impacts of aid for trade projects.

Critically, aid for trade partnerships, including on issues of sustainability, will only work if developing countries are in the driver’s seat with regard to prioritization and coordination in light of wider development and sustainable trade priorities. This will require national-level leadership. Effective priority-setting can be bolstered by support for integrated policymaking involving a diversity of relevant government ministries and regular consultations with stakeholders, including local businesses, civil society, and researchers. 

To scale up and speed up just transitions to sustainable trade, governments must use this 10th Global Review of Aid for Trade to spur concrete action. They need not wait two more years for a further review. Together, governments can already work to pursue the development of a clear set of sustainability goals, priorities, and targets for the next aid for trade work programme, underpinned by the environmental, economic, and social urgency of responding to environmental crises and advancing sustainable development objectives. 

To support such work on an ongoing basis, they could agree to convene joint sessions of the WTO Committee on Trade and Development and the Committee on Trade and Environment focused on priorities at the intersection of aid for trade, environment, and sustainable development.

In addition, members could call on the OECD and WTO secretariats to lead on a number of tasks that would inform and support the contribution of aid for trade to sustainable trade. These could include a sustainability review of aid for trade, country-led assessments of trade-related sustainability priorities, and the development of indicators for monitoring the sustainability impacts of aid for trade projects as well as best practices for designing and implementing projects that respond to the sustainability objectives of developing economies and LDCs.

Governments can also catalyse dialogue, share experiences, and bolster practical cooperation through member-led initiatives at the WTO, such as the Trade and Environmental Sustainability Structured Discussions (TESSD) and the Dialogue on Plastic Pollution (DPP), each of which regularly highlight the importance of enhanced aid for trade for developing countries, and especially for LDCs, on the sustainability dimensions of trade. Members of each initiative could develop specific aid for trade related outcomes for MC15.

Alongside, governments need to do the work at home, developed and developing, to build trade cooperation partnerships and develop coherent trade-related strategies and priorities that address the environmental risks facing trade, foster sustainable economic transformation and resilient development, and position their private sectors to succeed in sustainable trade. 

Twenty years on, there is momentum to build on. WTO members have the opportunity this week to step forward on a renewed aid for trade agenda focused on mobilizing dynamic partnerships that can support developing countries to tackle pressing trade and development challenges and seize new opportunities, including at the intersection of trade and sustainability. In so doing, governments must keep front of mind the huge gap between needs and available support for a just transition to sustainable and resilient trade, and the urgency, scale, and trade impacts of intersecting environmental crises. 

There has never been a more urgent moment for renewed commitment and action on mobilizing the additional resources, investments, and partnerships required for a just transition to sustainable and resilient trade. Strengthened aid for trade partnerships, developing country leadership, and an enhanced focus on sustainability priorities, would yield benefits for all and for the planet.

* This piece is an updated version of an article published in Synergies.

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Carolyn Deere Birkbeck is Founder and Executive Director, Forum on Trade, Environment, & the SDGs (TESS).

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Synergies is an online platform featuring expert commentary and opinions curated by TESS. We foster dialogue and incubate ideas on how to shape a global trading system that effectively addresses global environmental crises and advances sustainable development. Synergies draws on perspectives from leading experts and practitioners across policy communities from around the world. We cultivate solutions-oriented policy analysis for a sustainable future.

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