Box 2 Aid for Trade

World trade has been sluggish since the global financial and economic crisis in September 2008. In order to overcome this serious situation, it is essential that developed countries and emerging economies make efforts to maintain the free trade system, while refraining from protectionism, and provide support for developing countries, including least developed countries (LDC), to be further integrated into the multilateral trading system. Aid for Trade (AfT) is a way of assisting the above efforts from various aspects. It can be said that trade liberalization and "Aid for Trade" are "two wheels" of one "cart" to revitalize world trade.

AfT is aimed at supporting developing countries to help them achieve economic growth through trade under the multilateral trading system, in which the World Trade Organization (WTO) plays a central role. AfT enables these countries to work on capacity building and infrastructure development related to trade.

Japan announced the "Development Initiative for Trade*1" in 2005 as a comprehensive approach which incorporated the assistance methods of Japan from the perspective of making an active contribution to AfT. Based on this initiative, Japan, as a major donor*2 of AfT, provided several types of distinctive support, such as assistance to Africa in the field of trade and investment as a step toward doubling ODA, as announced at the Fourth Tokyo International Conference on African Development (TICAD IV), and assistance through the "One Village, One Product Campaign" for the purpose of helping developing countries enter into foreign markets. All of the initial targets were achieved during the planned three year period. These accomplishments were highly appreciated in regional review meetings in Africa as well as in Asia.*3

Taking into consideration the current international economic situation, Japan announced the "Development Initiative for Trade 2009" as a new strategy when the Second Global Review Meeting of Aid for Trade*4 was held in Geneva, Switzerland in July 2009, co-organized by the WTO and the Organisation for Economic Co-operation and Development (OECD). Under this new Initiative, the Government of Japan plans to provide the following assistance over a three-year period between 2009 and 2011.

(1) Japan will provide a total sum of US$12 billion in bilateral assistance related to AfT, which exceeds the target set under the previous Initiative. Japan will also implement technical assistance by dispatching and accepting a total of 40,000 experts and trainees in response to the demand for enhanced human capacity development.

(2) With regard to efforts to enhance open market economies, Japan will overhaul the Generalized System of Preference (GSP).

(3) As for the issue of trade finance, Japan will steadily implement its commitments promised at the G20 London Summit meeting and on other occasions.

Japan's leadership was highly praised at the above mentioned Global Review Meeting (which featured the participation of representatives from the Government, Japan International Cooperation Agency (JICA) and Japanese banks). It is expected that Japan and other developed countries will provide AfT for developing countries steadily and promote their participation in world trade.

*1 Under this initiative, during the three-year period between 2006 and 2008, financial cooperation totaling US$ 10 billion was extended through a combination of assistance on "knowledge/technology," "financial resources" "human resources" and "institutions" in each of the three areas of "production," "distribution/sales" and "purchase." In addition, a total of 10,000 experts and trainees were dispatched and accepted as part of technical cooperation in these areas. Furthermore, market access under tariff-free quotas, was given to LDC countries through this initiative.

*2 In 2006, Japan ranked first in terms of the amount donated (approximately US$4.6 billion). In 2007, Japan ranked third (approximatelyUS$4.4 billion) behind the US and the World Bank. In 2008, Japan donated approximately US$7.8 billion.

*3 A review meeting in the African region was held in Lusaka, Zambia in April 2009, and another review meeting in the Asia-Pacific region was held in Siem Reap, Cambodia in May 2009.

*4 The first meeting was held in November 200