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At A Glance

·         Trade is a key means to fight poverty and achieve the Millennium Development Goals, specifically by improving developing country access to developed country markets, and supporting a rules-based, predictable trading system.

·         The World Bank Group’s (WBG) trade programs (a) promote a multilateral trading system that is more supportive of development; (b) make trade competitiveness a centerpiece of countries’ development strategies; and (c) support trade and trade facilitation reforms through effective “Aid for Trade” programs.

·         World Bank trade-related lending for fiscal year 2012 (FY12) is a total of $3.2 billion to help developing countries achieve their trade-reform objectives. This is nearly a six-fold increase from FY03 levels of $566 million.  The share of trade-related lending in total Bank lending has grown from an average of 2 percent in FY02-FY03 to an average of 7 percent in FY11-FY12. Overall Bank lending for FY12 stands at $43.6 billion. 

·         An example of our work is helping to improve trade logistics in developing countries. The Trade and Transport Facilitation Project in the Economic and Monetary Community of Central Africa (CEMAC) focuses on improving the efficiency of the trade corridor running from Cameroon to Chad and the Central African Republic. Customs processing time for port entry of containers in Cameroon improved significantly when performance contracting was introduced at the Customs office.  Processing time which used to take over 22 hours in 2009, by end 2011 was taking just under two hours. Moreover, efficiency gains did not come at the cost of revenue collection, which still continued to increase.

·         The WBG launched a new trade strategy in 2011 following consultations with a diverse group of stakeholders. The new strategy, Leveraging Trade for Development and Inclusive Growth, will target four priority areas: trade competitiveness and diversification; trade facilitation, transport logistics and trade finance; support for market access and international trade cooperation; and managing shocks and promoting greater inclusion.

·         The WBG is also committed to building knowledge through research, analysis, tools and data, as well as through the delivery of technical assistance.

Trade Matters

Countries open to international trade tend to grow faster and provide more opportunities to their population. As noted by the Commission on Growth and Development, all developing countries that have experienced sustained periods of high economic growth prospered by being open to global markets. However, a number of developing countries continue to face obstacles in accessing global markets due to limited supply (infrastructure) capacity and unfavorable business and investment climates.

Trade for Development

Our aim is to make the world trading system more supportive of development and to help countries benefit from increased globalization by:

·         Supporting the conclusion of pro-development trade agreements (multilateral, regional, and bilateral). 

·         Emphasizing trade and competitiveness at the core of national development strategies.

·         Promoting trade-related reforms through effective “Aid for Trade” programs. 

Renewed Economic Uncertainty and the Eurozone Crisis: WBG Trade Support Programs

·         The WBG has worked to help developing countries cope with the effects of the 2008 global crisis and continues to support developing countries in the face of renewed economic uncertainty in 2012,  increasing trade-related lending to a total of $3.2 billion in FY12 (excluding infrastructure projects).  The regions to receive the greatest support in FY12 are Europe and Central Asia, which has the closest trade and financial ties with Europe, and Sub-Saharan Africa, which has some of the poorest countries.

·         The WBG has stepped up its support of trade finance since the 2008-09 crisis. As of January 2012, the International Finance Corporation (IFC), the Bank’s private sector arm, has supported over 32,000 global trade transactions worth $40 billion, through the Global Trade Finance Program (GTFP) and the Global Trade Liquidity Program (GTLP).  The GTLP is being re-launched for another three years, following the recent global uncertainty and drop in liquidity. The GTLP invests up to $1 billion, and will mobilize $1billion from program partners and $2 billion from commercial banks, for a portfolio of $4 billion, which, upon rotation, could support up to $18 billion in emerging-market trade finance over these three years.  The IFC has also launched the Critical Commodity Finance Program (CCFP), supporting trade finance in global agricultural commodities trade and energy-related goods in the world’s poorest countries.  In March 2012 the CCFP made its first investment of $250 million to Société Générale to sustain agricultural trade in Sub-Saharan Africa and the Middle East.  The CCFP’s total proposed investment in FY12 is $1 billion.

·         The WBG is monitoring developments in agricultural markets and the effects of rising food prices.  The Global Monitoring Report for 2012, Food Prices, Nutrition and the Millennium Development Goals, includes a discussion on the role trade integration can play in overcoming domestic fluctuations in food supply, improving the movement of food across and within borders, and reducing prices faced by consumers.

Supporting Trade Facilitation Projects

·         Trade-related projects supporting trade facilitation and market access comprised almost half the FY12 trade portfolio, followed by projects with a focus on regional integration, export development and competition.

·         The WBG’s Trade Facilitation Facility supports improvements in trade facilitation systems that reduce developing countries’ trade costs and improve competitiveness. As of March 2012, 48 projects with a total budget allocation of $34.6 million were approved, mainly benefiting African countries.

Improving Access to Trade Data

·         In cooperation with other international development partners, the World Bank launched the Transparency in Trade Initiative to provide free and easy access to data on country-specific trade policies, such as tariffs, non-tariff measures, and services regulations.

·         In the fall of 2010, the WBG revamped World Integrated Trade Solutions, a trade analysis software tool that allows users to access a global trade database. The software, which is available online, makes this information more accessible to the public. 

·         The Bank introduced a regional trade integration website featuring the Global Preferential Trade Agreements Database.  The site provides detailed information on free trade agreements around the world.

·         To better monitor trade policy developments, the WBG has supported the Global Trade Alert, a joint venture of think tanks around the world, and maintains the Temporary Trade Barriers Database. Both databases allow users to track the use of trade-distorting government measures initiated since the 2008 crisis. 

Examples of our Operational Work

·         The World Bank is the largest multilateral provider of “Aid for Trade”, providing $15 billion per year since 2002, towards trade policy and regulation, economic infrastructure (ports, roads, airports, telecommunications, and energy), capacity building, and trade-related budget support. 

·         A World Bank “Aid for Trade” program in Lesotho has trained hundreds of factory workers, a majority of them women, in order to improve the country’s trade competitiveness.

·         In Lao PDR, the World Bank is providing TFF-financed technical assistance to support the preparatory work necessary to establish a National Single Window, to be followed by a full Bank operation. 

Trade Knowledge and Publications

·         Since 2002, the WBG has delivered more than 1,000 pieces of analytical work on trade issues. To access our publications, go to http://econ.worldbank.org/programs/trade

Contact: Alejandra Viveros, (202) 473-4306, aviveros@worldbank.org 

Updated March 2012