Experts on trade, environment, and sustainable development came together for a webinar, organized by the International Institute for Sustainable Development (IISD) and the Forum on Trade, Environment & the SDGs (TESS), to discuss opportunities and challenges associated with greening Aid for Trade in the context of the 2030 Agenda for Sustainable Development.

Nathalie Bernasconi-Osterwalder, Executive Director, IISD Europe, offered opening remarks. Noting that Aid for Trade is an integral part of SDG 8, in particular target 8.a on increasing Aid for Trade support for developing countries and least developed countries (LDCs), she said more is needed to make it an engine for poverty reduction and green growth, and called for integrated policy approaches. As World Trade Organization (WTO) members prepare for the 2022 Global Review of the Aid for Trade initiative, Bernasconi-Osterwalder said ensuring these efforts incorporate sustainability considerations is critical for a robust, green, and inclusive recovery from COVID-19.

Soledad Leal Campos, Lead, Sustainable Trade, IISD, moderated the discussion. She said the webinar aimed to:

• trace the origins and evolution of the Aid for Trade initiative and its relationship with the SDGs;
• see how environmental considerations have been included in Aid for Trade discussions and how they have been taken forward by different actors; and
• exchange views on the main policy issues at stake, such as what is needed to enable the initiative to better support developing countries in achieving their sustainable development objectives.

Carolyn Deere Birkbeck, Director, TESS, reviewed a forthcoming scoping paper on greening Aid for Trade, which, she said, requires support for developing countries and LDCs to ensure they are not disadvantaged or marginalized. Deere Birkbeck indicated that while Aid for Trade represents around 25% of official development assistance (ODA), there is limited focus on its environmental aspects, green Aid for Trade financing falls far short of needs, and relevant sources of finance are poorly integrated. She said actions to green Aid for Trade need to take into account the principle of common but differentiated responsibilities (CBDR) and competitiveness concerns and to ensure that trade rules and policies address developing countries’ needs. Deere Birkbeck outlined an approach to Aid for Trade that has developing countries “firmly in the driving seat,” mainstreams environmental considerations, and adds finance in line with developing countries’ priorities.

Olivier Cattaneo, Head, Policy Analysis and Strategy Unit, Development Co-operation Directorate, Organisation for Economic Co-operation and Development (OECD), pointed out that the purpose of Aid for Trade is to ensure that developing countries lacking basic infrastructure and trade capacities can still benefit from trade. He informed participants about an OECD database, which includes Aid for Trade data and project descriptions, and uses environmental markers to identify key trends. He outlined ongoing efforts to modernize the statistical tool by augmenting it with artificial intelligence to avoid greenwashing.

Michael Roberts, Aid for Trade Coordinator, Development Division, WTO, explained how environmental considerations have been increasingly included in Aid for Trade priorities. He identified the need for further alignment of donor countries’ and recipient countries’ priorities.

A panel focused on opportunities, risks, and challenges discussions of green Aid for Trade should address, and shared views on how this agenda could be taken forward, including at the WTO’s Twelfth Ministerial Conference (MC12), scheduled to take place from 30 November to 3 December 2021 in Geneva, Switzerland, and during the Aid for Trade Global Review in 2022. Several speakers suggested a ministerial declaration that would address environmental sustainability issues.

Rashid Kaukab, Executive Director, CUTS International, Geneva, identified three broad trends in Aid for Trade: a move towards more diversification and structural transformation to address the needs of developing countries and LDCs; a move to look at issue linkages with gender and micro-, small, and medium-sized enterprises (MSMEs), among others; and efforts to align with the SDGs. He noted a drop in Aid for Trade due to the pandemic as ODA is being used for “more urgent” needs, and identified opportunities for “building back better together.” Among challenges, Kaukab mentioned the need to: “do more with less”; balance immediate needs against long-term requirements; and avoid top-down approaches to ensure beneficiaries’ ownership.

Stacey Mills, Consultant, Environment and Trade Hub, UN Environment Programme (UNEP), said developing countries face the challenge of “double exposure” to economic and environmental risks such as commodity price shocks, climate change, and desertification. She provided examples of how green Aid for Trade can help developing countries build resilience and support efforts to achieve the SDGs, including:

• Providing capacity-building support to help business take advantage of new green export opportunities and integrate into sustainable supply chains;
• Supporting the development of climate-resilient key trade-related infrastructure;
• Supporting climate change adaptation measures to enhance key export sectors such as tourism and agriculture;
• Promoting investment in renewables and the use of more efficient technologies in production processes; and
• Supporting trade policies that protect the ecosystems that underpin economic activity and trade.

Options to boost the contribution of Aid for Trade that Mills identified include:

• Raising awareness among donors and partner countries about the potential of Aid for Trade to promote resilience and green growth;
• Working with beneficiaries to help identify trade and environmental challenges and priorities;
• Mainstreaming climate and environmental considerations in Aid for Trade planning and projects; and
• Securing additional Aid for Trade funding.

Liesbeth Casier, Senior Policy Advisor, IISD, pointed to the “cross-cutting” nature of infrastructure in relation to the SDGs, particularly SDGs 1 (no poverty), 2 (zero hunger), 6 (clean water and sanitation), 7 (affordable and clean energy), 9 (industry, innovation and infrastructure), and 11 (sustainable cities and communities). If “done right,” she said infrastructure can help alleviate poverty, create jobs, and promote the well-being of people and the planet, among other advantages. Casier called for integrated approaches to infrastructure, from planning to procurement to financing, that incorporate environmental benefits such as climate resilience and sustainability. She highlighted IISD’s work on: climate risk assessments of infrastructure projects in the transport sector; and economic and financial assessment of bus rapid transit infrastructure in Dakar, Senegal.

Annegret Brauss, Coordinator, “GreenToCompete” Initiative, International Trade Centre (ITC), discussed how green Aid for Trade can support MSMEs in developing countries. She said the green transition may be “the biggest business opportunity,” and while MSMEs have been put in the position of a “taker of what is coming,” they are “in this game not to survive but to thrive.” Brauss noted that according to ITC’s SME Competitiveness Outlook 2021, nearly 60% of African companies report advantages of being green, such as new and higher quality products, access to markets, lower production costs, and access to green finance. Among examples, she mentioned the coffee sector in Uganda where coffee pulp is used to produce compost. Brauss stressed the need for Aid for Trade to reflect green priorities, from needs assessment to implementation, and focus on building new opportunities and ecosystems, which, she said, will “put entire sectors on a more environmentally friendly trajectory.”  

Ambassador Muhammad Mujtaba Piracha, Permanent Representative of Pakistan to the WTO, said members have been actively contributing to environment and trade discussions at the WTO, including through the structured discussions on trade and environmental sustainability (TESSD) and the Informal Dialogue on Plastics Pollution and Environmentally Sustainable Plastics Trade. He warned that “transformational realignment” will not be easy as many developing countries fear steep adjustment costs that may include consumers paying more for goods with green credentials, and carbon border adjustment measures. Ambassador Piracha highlighted the catalytic role of Aid for Trade in helping to understand the scale of the challenge and to mobilize critical supply-side infrastructure for green transformation. He outlined plastic recovery and recycling efforts in Pakistan where Aid for Trade could help foster an inclusive green economy by integrating the informal sector.

The UK Government provided support for the webinar. [SDG Knowledge Hub Sources] [Webinar Landing Page]