It has been 20 years since the 2005 Hong Kong Ministerial Meeting recognised that developing and, mainly, least developed countries (LDCs) cannot meaningfully participate in the global trading system as envisaged while establishing the World Trade Organization (WTO) without “some kind of support” to enhance their trade capacity. This gave birth to the idea of Aid for Trade (AfT). The WTO claims that AfT is particularly helpful to the LDCs, which “face a range of supply-side and trade-related infrastructure obstacles which constrain their ability to engage in international trade.” In theory, it mobilises resources to address the trade-related constraints identified by these countries.

According to WTO data, $556 billion in AfT was disbursed between 2006 and 2020. AfP’s priority and focus naturally shift with the tide of time. Initially, it focused more on improving trade logistics and enabling small businesses to trade their generally uncompetitive products, wishfully, in developed countries. Now, the weight of the discourse seems to be inclined to climate change issues arising in every knot of the supply chain, the scope of gender equity in sharing trade benefits, and the digital divide as an additional constraint to LDCs when the global trade in both goods and services is being rapidly digitised.

Key questions

Has the AfT really helped developing and least-developed countries build their trade capacities and provided the much-needed market share for their goods (and services) in developed countries? The WTO leadership claims that trade (solely?) lifted 1.5 billion people out of abject poverty. It appears as if the global population’s poverty reduction is only because of increased cross-border trade and all the official development assistance received by any poverty-stricken country meant only for trade.

Nevertheless, the amount in aggregate disbursement under AfT looks impressive. When it comes to the annual average, it is less than $40 billion a year; when divided among the 137 developing out of 217 economies, the dole out is mere symbolism and not enough to undertake even a single medium-sized project. Forty-five countries are still categorised as LDCs, and 32 are small, landlocked economies like Nepal. When viewed through the challenges faced in accessing trade passage through another sovereign territory, the correlation between their LDC status and landlockedness can’t just be coincidental.

For instance, according to the Creditor Reporting System of OECD, Nepal received over $300 million as AfT until 2019. The Enhanced Integrated Framework under the WTO supported the development of the Nepal Trade Integration Strategy (NTIS) to identify the goods with import potential and to conduct several studies like the e-readiness of the businesses. Nepal has developed three versions of the NTIS in the last 15 years—in 2010, 2016 and 2023. The country has increased the list of products and services from 19 to thirty-six. But export trade has only nose-dived over this period, not only in terms of export-import ratio but also in nominal value.

Why have we failed in our trade capacity building so badly, and why couldn't all the financial aid flow in support to this end? More importantly, have these international frameworks and support helped developing and least-developed countries excel in balancing their trade in their favour? More often than not, the answer, sadly, is in the negative.

Why are LDCs left behind?

The 9th Aid for Trade review took place at the WTO headquarters in Geneva in the last week of June. Sessions like “Trade for All” and “Realizing LDCs’ Trade Potential” were also part of the rituals. The reasons for LDCs’ failures may be aplenty, including their inability to set production and trade priorities, bad governance and political instability. However, in the true sense, they are not supported throughout this process. Instead, these voiceless countries are incessantly derided for not doing enough, being reactive, making negativity a survival tactic, and being angry and critical of the Western developed countries for no reason.

The reality is different. These essentially neo-colonial narratives are created to cover up the developed countries’ intentions to extend their trade protectionism. They lecture on the developing and poor countries on the perils of climate change while failing to change their own lifestyle and renunciating their luxuries, even partially. Such annual rituals, even publications, highlight achievements that hardly reflect ground reality in the countries concerned; instead, feigned diplomatic niceties rule the roost.

Contentious issues like the possibility of the supply chain being destroyed by the Russia-Ukraine war, the trade wars between the major trade partners in the world, like the US and China and India and China, and their gross violations of global trade rules, are hardly discussed in detail. The discussion on peripheral issues chosen by “experienced” consultants makes it easy to evade truly excruciating issues.

Underdeveloped and developing countries are instructed to transform into a green economy. But the governments and citizens of developed countries who are using air conditioners, refrigerators and fossil fuel vehicles on a mammoth scale are not ready to give up their lifestyles. The underdeveloped world, which consumes only a very small part of it, is held guilty.

The developed countries have no intention of reducing major carbon emissions, and it looks impossible given their consumption patterns. Seventy percent of the electricity consumed by developed countries comes from coal, diesel and petrol plants. Air travel and cargo shipment are unlikely to be replaced by green energy for the next several decades.

There is nothing for least-developed countries to sell in the competitive global trade. They cannot be expected to produce and sell high-quality, refined and high-value-low volume goods. They can sell either agricultural products or primary or secondary raw materials. It can never be a profitable and sustainable trade.

Lately, organic products have suddenly become the import priority of developed countries. But have chemical fertilisers and pesticides been explored and diffused by developing countries? The production system of the developing world became dependent on harmful fertilisers and pesticides produced and aggressively traded by the developed countries. How, then, will these agriculture-based economies trade with new phyto-sanitation and other rules?

Worst of all, the West has monopolised the knowledge products, knowledge systems and discourses related to the trade vulnerability of the LDCs. This has created a significant barrier even for a dispassionate debate on it. The LDCs are once again at the receiving end of the so-called global system—trade.