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RAJASEKHAR 1226211201(IBF) International Organizations
Summary Aid for Trade helps countries to develop trade strategies, build trade-related infrastructure and improve their productive capacity in order to encourage growth and reduce poverty. Activities include helping countries to build their capacity to trade, through training and technical cooperation such as supporting national trade priorities, adjusting legislation on trade and providing technical assistance for studies on trade-related subjects. Increasing and improving trade opportunities are part of the solution towards inclusive and sustainable growth of developing countries. Indeed, no country has ever lifted itself out of poverty without trade, at regional and international level. Introduction
EBRD Trade Finance Aid The European Bank for Reconstruction and Development (EBRD) plans to offer $20 million trade finance guarantee facility to VTB Kazakhstan, a subsidiary of OJSC Bank VTB of Russia to enhance trade finance services and will facilitate transactions with longer maturities of Kazakhstan’s exporters and importers. Programme expects that signing of this agreement will enable VTB Kazakhstan to support more importers and exporters in Kazakhstan and increases the volume of trade between Kazakhstan and other countries in the region. Subsidiary Joint Stock Company VTB Kazakhstan is a member of VTB Group represented by banks and financial organizations in CIS countries, Europe, Asia and Africa.
even as it came under several sources of strain. Availability of trade finance was different in developed and developing countries during the crises (2008). including through lower activity and destocking. as such. trade volumes dropped mostly as a result of the spillover of the financial crisis to the real economy. with world trade of goods falling by 23 percent in 2009. Disbursements have grown steadily since its launch. and that banks in developing countries became more risk-averse in light of the drastic reduction in global liquidity and a decline in the number of intermediary players. However. The question whether a lack of trade finance solely to blame for the trade collapse. Indeed. the most recent financial crisis provides a myriad of lessons learned in terms of trade finance. in 2005. In particular.The Financial Crisis and Trade Finance The 2008-9 financial crisis spread from the United States to the rest of the world. this was not the case in some developing countries. In advanced and emerging economies. the survey showed that small and medium firms (SMEs) were more affected than larger firms because of their weak capital bases and bargaining power. which found that the global financial crisis constrained trade finance in developing countries for exporters and importers alike. The effects of the global contraction were so severe that the world experienced the largest drop in global trade volumes since World War II. it has become a key component of international Official Development Assistance (ODA). the World Bank conducted a firm and bank survey in 14 developing countries across five regions.7 per cent aid target for the international community derived from an effort to link a growth target in developing countries. Aid for Trade is seen as the main multiagency apparatus for addressing supply side and institutional constraints that hamper the full gains to developing countries from their increased participation in the international trading system. from 2 . policy makers found themselves in uncharted waters. bank-intermediated trade finance largely held up. Nevertheless. or was it more a symptom of reduced global demand caused by spillovers of the crisis to the real economy. Aid for Trade: A failing grade in LDCs UNCTAD has promoted an integrated approach to aid and trade in support of lasting developmental gains. rather. especially for the Least Developed Countries (LDCs). In 2009 and 2010. Some authors argue that trade finance was not the main driver. UNCTAD`s seminal efforts to establish the 0.
Guatemala. Aid for Trade to LDCs almost doubled. the EU and its Member States had already met their €2 billion target. However. making the best of the EU's generous tariff preferences. and Uruguay. from US$ 4. and represents a total of $1. while other developing countries received a more modest increase. Brazil. In 2012 report – part of a wider Annual EU Accountability report on Financing for Development . On Trade Related Assistance. EU’s Aid for Trade Finance The EU and its Member States have been confirmed as the largest provider of Aid for Trade in the world.2 billion in 2010.6 billion in 2010. Sub-Saharan Africa continues to be the main beneficiary of EU Aid for Trade. helping to tackle the real barriers to trade. The EU and its Member States remain the biggest providers making up 60% of global commitments. covers 21 countries in Latin America and the Caribbean. on average. supporting 3 . from around US$ 10 billion in 2005 to US$ 16.7 billion committed. despite the economic crisis it accounted for around a third of total worldwide Aid for Trade in 2010 by maintaining the all-time high registered the year before and totaling some €10. The most active banks are in Argentina. as a percentage of total ODA. Transactions commonly average $1. including reforming the EU's preferential trade schemes to focus more on the poorest countries and stepping up negotiations on free trade agreements with developing country partners.8 billion in 2005 to US$ 8.approximately US$ 15 billion to US$ 25 billion in 2010.2 million for pre-export and import financing. Honduras.8 billion in 2010. both in 2008 and in 2009 and reached €2. Aid for Trade empowers operators in developing countries to boost their trade to the EU. committed in the 2007's EU Aid for Trade Strategy. EU will continue to help the developing countries most in need to make the most of open markets and to reduce poverty. Aid for Trade to LDCs represented. less than 20%. Trade Finance in Latin America and the Caribbean IFC’s Global Trade Finance Program currently includes more than 58 issuing banks.The Commission proposed a number of ways to improve the effectiveness of EU trade and development policy.95 billion in approved trade lines.
Despite recent capital flow constrictions. that were willing to bear the risk. facilitating trade. which imported notebooks from an SME in Mumbai. Costa Rica-based Banco Improsa was at a distinct disadvantage when it came to providing trade finance for the SMEs that make up the bulk of its business and lost about 15 transactions each year because the bank did not have relationships with banks in other parts of the world. IFC remains committed to keeping trade finance alive for small and medium enterprises (SMEs) in the region. the Integration and Trade Sector held two events focused on the internationalization of SMEs in Antigua. building capacity. which comprises more than 94% of businesses in Latin America and the Caribbean. With the objective of supporting the SME sector. Developing export potential and increasing foreign investments are two key factors for economic development in an increasingly globalized world. Role of IDB The IDB’s Integration and Trade Sector is continuing its commitment to working with small and medium enterprises in the region. As a small bank in a small market. In this context. After joining the program in June 2009. representing approximately 70 percent of Costa Rica’s GDP. in addition. INT carries out several fairs each year that directly support the internationalization process of SMEs and. Banco Improsa gained access to a global network of international banks which help facilitate trade among SMEs. especially in Asia and India. as part of its goal of supporting export promotion and attracting foreign investment. In its first transaction with the program. IFC’s Global Trade Finance Program (GTFP). India.mainly agribusiness and infrastructure industries. Guatemala during July 2012: LAC Flavors 2012 and the Sub-regional Dialogue for Mesoamerica and the Dominican Republic. LAC Flavors is a business roundtable for small and medium enterprises and potential 4 . Banco Improsa financed a small. and strengthening institutions in the area of trade and integration in Latin America. encourage dialogue among policymakers to promote inclusive trade and utilization of trade agreements by SMEs. which provides guarantees for risk mitigation in emerging markets. family-owned business in San Jose. changed all that.
Aid for Trade to developing countries: EU maintains its leading position. and Japan. Guatemala with 40 potential clients from the United States.eu/article/ebrd-extends-trade-finance-aid 2. the Sub-regional Dialogue for Mesoamerica and the Dominican Republic brought together various IDB experts and ViceMinisters and other government leaders in the SME sector from the Mesoamerican region to discuss policies and best practices both in Latin America at the extra-regional level for supporting the internationalization of SMEs. The European Political Newspaper. References 1.international buyers. South Korea. with a focus on the food sector. EBRD extends Trade Finance Aid News Europe online. 9th July 2012 5 . For its part. More than 1. China.300 business meetings took place during two days when over 120 food exporting businesses selected to participate in LAC Flavors 2012 met in Antigua.neurope. as well as the support instruments of the IDB Group. 1st May 2011 http://www. Canada.
org/en/topics/trade/the-idb-supports-the-internationalization-of-smes-in-the-regionthrough-a-business-roundtable-and-best-practices-programs.eu/rapid/pressReleasesAction. 2011-2021 http://siteresources.pdf 4. Global Trade Finance in Latin America and the Caribbean http://www1.org/growth/trade-finance-and-financial-crisis 5.worldbank.ifc.7005. The IDB supports the internationalization of SMEs in the region through a business roundtable and best practices programs http://www.worldbank. UNITED NATIONS CONFERENCE ON TRADE AND DEVELOPMENT Aid for trade: A failing grade in LD Cs? April 2012 http://unctad.org/TRADE/Resources/WBGTradeStrategyJune10.org/en/PublicationsLibrary/uxiiipb2012d2_en. The world Bank Group Trade strategy.do?reference=IP/12/758&aged=0&language=EN&gu iLanguage=en 3.html 6 . Trade Finance and the Financial Crisis By OTAVIANO CANUTO. 28th September 2011 http://blogs. Leveraging for trade and development and inclusive growth.org/wps/wcm/connect/region__ext_content/regions/latin+america+and+the+caribbea n/news/global+trade+finance+in+latin+america+and+the+caribbean 7.pdf 6.iadb.http://europa.
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