Australia's 'aid for trade' strategy a springboard for aid impact

A port market in the Caribbean, the region where Australia disbursed $60 million in official development assistance. Can Australia’s aid for trade program provide a new approach to sustainable development? Photo by: DFAT / AusAid / CC BY

Continuing to push its controversial aid for trade strategy, the Australian government hopes to boost its influence within the international development community — particularly at the World Trade Organization and in final negotiations on the post-2015 agenda.

Following the release of its newest aid for trade strategy Wednesday, Foreign Affairs Minister Julie Bishop said she expects investments in this area will increase Australian aid’s impact — and indirectly its presence — on the international stage “by driving sustainable economic growth and poverty reduction in developing countries.”

Among other targets set by the Abbott government is the greater focus on aid for trade by increasing appropriations to 20 percent of the aid budget in the next five years — something that the government hopes could make Australia a global leader in trade, while keeping in line with the 2013 decision to merge and align foreign policy interests with development aid objectives.

“Australia’s strengthened commitment to aid for trade provides us with leadership opportunities in a range of international fora,” the report stated, adding that aid for trade complemented Australia’s economic and public diplomacy strategies in the Indo-Pacific region.

The government’s priority areas include trade and investment policy, trade facilitation, global value chains, infrastructure, private sector development, economic empowerment of women, knowledge and skills development, agriculture, and services.

Aid for trade is not new in international development discussions, with its formal introduction coming in 2005 during a WTO event in Hong Kong. There, the Global Aid for Trade Initiative was launched to mainstream the process of assisting developing countries to integrate themselves in the global trade cycle and, in turn, become less economically dependent.

But while it has been a decade since aid for trade became mainstream, opinion is still divided on whether it constitutes a genuinely sustainable approach to development. The Abbott government’s decision to cut back on development assistance, dissolve its main aid agency, and push aid for trade forward as the main ODA strategy — with Bishop describing the shift as a “new aid paradigm” — has incurred the ire of several development organizations both domestically and abroad.

To its credit, the Department of Foreign Affairs and Trade admits that “trade alone is not sufficient to achieve economic growth or to reduce poverty,” to be harnessed rather as a complementary approach to addressing development.

With plans tabled by the Association of Southeast Asian Nations to become one economic community by the end of the year, Australia may have a new frontier in which to roll out its aid for trade strategy yet further.

One thing’s for sure, the ongoing debate is only set to further intensify in the months ahead.

Have your say on the aid for trade debate by leaving a comment below and stay tuned for more Devex coverage on the issue, together with insights from the ongoing Global Review of Aid Trade in Geneva, Switzerland.

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About the author

  • Lean 2

    Lean Alfred Santos

    Lean Alfred Santos is a former Devex development reporter focusing on the development community in Asia-Pacific, including major players such as the Asian Development Bank and the Asian Infrastructure Investment Bank. He previously covered Philippine and international business and economic news, sports and politics.