Aid for Trade (AfT) forms an important component of Vanuatu’s efforts to leverage trade to promote sustainable economic growth in the country. As a percentage of total Official Development Assistance (ODA) to Vanuatu, AfT flows have increased substantially over the last decade, from 14% of ODA in 2002 to 46% in 2009.
Globally, the AfT initiative was launched at the 2005 WTO Ministerial Conference in Hong Kong. Aid for Trade is defined according to OECD/WTO as Official Development Assistance (ODA) interventions whose purpose-code falls under one of the following categories:
- Enhanced Trade-Related Infrastructure
- Develop Productive Capacity for Trade
- Trade Policy and Regulations
- Promote Trade-Related Adjustments
AfT allocated to Vanuatu is broadly aligned with Vanuatu’s comparative Advantage and with the need to break barriers to trade. In order for alignment to be improved, the TPF recommends that support to tertiary productive sector (services) should not be only limited to tourism.
The Trade Development Division (TDD) is responsible for coordinating Aid for Trade Funds. The TDD reports to the Director General’s Office under the Ministry of Tourism, Trade, Industry, Commerce and Ni Vanuatu Business.
Programs under the Aid for trade in Vanuatu are;
1. Productive Sector Growth Support Program (PSGSP).
PSGSP is financed by the European Union (EU) under the European Development Fund (EDF) - 10. The total funding support is approximately VUV 500 million, of which the Trade component is VUV 100 million. The following projects are part of the PSGSP:
- Enhance capacity of the Department of Customs and Inland Revenue (DCIR) in Customs Valuation, and for administering Rules of Origin (ROO).
- Draft legislation and regulations on Trade Remedies, including anti-dumping duties, countervailing subsidies and safeguards measures.
- Support the Department of Cooperatives to review 5 secondary cooperatives and formulate solutions to make the co-operatives more sustainable.
- Establish the needs and design criteria for a Marketing Information System (MIS) for the primary sector.
- Project to provide logistic support to the organization of NTDC meetings and enhance the visibility of the Ministry’s work in outer islands.
- Project to develop and strengthen Vanuatu’s national SPS and TBT architecture and the provisions of equipment to the Food Technology and Development Centre.
2. Enhanced Integrated Framework (EIF)
EIF is a multi-donor Program that supports LDCs to participate in the global economy by providing technical assistance to tackle supply-side constraints in trade. EIF builds on the work of the Integrated Framework (IF), in which Vanuatu participated between 2008 and 2010.
The EIF consists of two Tiers: Tier I supports capacity building and institutional strengthening within the recipient country, while Tier II finances larger projects that have the potential to catalyse trade development within the recipient country. The Tier I project is envisioned to run for 3 years (2013-2015), during which Vanuatu would be provided assistance worth vuv 100 million. The Tier II project is envisioned to run for 3 years (2014-2016), during which Vanuatu would be provided assistance worth up to vuv 1 billion.
3. Trade Advocacy Fund (TAF)
The Signing of the funding agreement for TAF marked the resumption of international cooperation between Vanuatu and the United Kingdom. TAF is financed through the UK Department for international Development (DfID) and has been established to help developing coutnries prepare for and engage fully in international trade negotiations so that international trade agreements reflect the interests of the poorest countries.
The following programs were supported under TAF:
- WTO negotiating and membership strategy;
- Services negotiating strategies for PACER Plus and MSG regional agreements;
- Negotiating skills workshops tailored to these strategies; and
- Analysis on the feasibility of a bilateral trade agreement with New Caledonia.
4. Governance of Growth
Following approval of the Trade Policy Framework, AusAID’s Governance for Growth (GFG) program has expressed some interest to be involved in the Vanuatu’s trade development agenda. Some funding has already been provided for technical assistance to the DG office and initial discussions have been undertaken over the possibility to provide further support to the Ministry.