Aid for Trade: Cool Aid or Kool-Aid?

Abstract

Aid for Trade may alleviate some fears by developing countries about the social cost of trade reforms and hence help de-block the WTO negotiations. It may also help address critical supply-side issues and contribute to the achievement of the MDGs. However, there is wide divergence in views what is covered, what should be supported and how. There are concerns among developing countries that, despite promises, aid for trade may simply be a redistribution of existing funds, that it may not address development priorities, and that arduous, new conditions will be attached. For these reasons, developing countries that might be expected to have welcomed the possibility of aid for trade, have looked with some suspicion at the proposals, regarding aid for trade more as Kool-Aid, rather than cool aid!