Trade for Development Fund

ContextFor developing countries, trade with other countries offers a wealth of opportunities: it opens up access to new regional and international markets for local goods, creates jobs in the export sector, and enables consumers to benefit from more product diversity and lower prices. Trade can thus help to generate pro-poor growth and reduce poverty on a sustainable basis – provided that trade promotion is oriented towards development. wo key factors determine whether the conditions in place in partner countries and economic communities are conducive to cross-border trade: the increasingly complex world trade system, and national and regional policies and structures. However, many partner countries – especially the Least Developed Countries (LDCs) – lack the capacities to influence international negotiations or initiate reforms at the local level.On the international level, Germany committed itself to providing more intensive support for developing countries’ integration into world trade. This in turn requires that trade promotion be mainstreamed more broadly in German development cooperation. Trade facilitation is one area in which there is a particular need for action: the recently concluded WTO Agreement on Trade Facilitation obliges Germany to support developing countries in implementing the provisions of the Agreement.ObjectiveThe implementation of the German international trade related obligations in partner countries is supported.ApproachIn order to create incentives for trade promotion in partner countries, the German Federal Ministry for Economic Cooperation and Development (BMZ) has established the Trade for Development Fund. As a first step, funding will be provided for trade facilitation measures in developing countries. Over the medium term, the Fund aims to mainstream trade promotion in German development programmes, for example by linking trade facilitation measures to existing projects on a flexible basis. In the interest of sustainability, measures which have been successfully piloted within the Fund framework should continue under other longer-term programmes after support from the Fund comes to an end. LDCs are given priority in the selection of project partners, reflecting their greater need for support.ResultsThe Fund is helping to mainstream trade promotion on a broader basis in Germany’s development cooperation portfolio. By implementing pilot projects which aim to facilitate trade in developing countries, Germany is meeting its international obligations in the field of trade. Support provided via the Fund enables partner countries, including LDCs, to utilise the positive potential of regional and international trade more effectively in pursuit of their development objectives. This makes a contribution to sustainable economic development.

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