Farmers in Niassa, Mozambique.
Photo: Kajsa Johansson/Sida
Increased trade is important for economic growth and poverty reduction. Sida can contribute to strengthening countries’ abilities to make their voice heard in international trade negotiations and to facilitating trade between countries.
Trade can play a major role in economic growth and poverty reduction. Sweden works together with partner country governments and government agencies, as well as regional and global organisations. Trade-related development cooperation also includes support to building capacity for improved regulation, participation in trade negotiations, as well as to reduce trade barriers and improve technical regulations and standards.
Trade is a link in development
Trade is a sector that relates to many other areas. When a country lacks basic institutional conditions – political stability, rule of law and infrastructure – it is difficult to take advantage of the benefits that free trade brings with it. An effective aid for trade therefore requires broad social solutions.
Sweden contributes to the international Aid for Trade agenda that includes three areas: trade-related infrastructure (roads, ports, energy), building productive capacity (private sector development, financial sector development, agricultural development, etc.), as well as trade policy and regulations. According to the EU Aid for Trade Strategy, the EU trade-related aid amounts to EUR 2 billion per year as of 2010. Of these, one billion is to be provided by the individual member states. Sida's total Aid-for-Trade portfolio amounted to SEK 2.5 billion in 2013, which means that Sweden fulfils the commitment by a wide margin if compared with the proportion to the size of the Swedish economy.
Trade-related interventions can also contribute to achievement of results in areas such as employment, agricultural development, democracy, etc.
Strong countries in the international context
Sida can help developing countries increase their participation in international trade by, among others, strengthening their ability to make their voice heard in the World Trade Organisation (WTO) and negotiations with other trade actors. Lack of knowledge among delegates can reduce these countries’ negotiation advantages. Many countries need to strengthen capacity in order to have the possibility to benefit from already existing agreements. Sida can also step in here with support. One such example is cooperation with the "Trade Policy Training Centre in Africa" (TRAPCA) in Arusha, Tanzania. It is a training centre that works to increase competence in trade policy, negotiating skills, and the recently concluded WTO agreement on trade procedures. Cooperation with Eastern Europe and the Western Balkans also largely aims to increase internationalisation of economic integration with the EU. In Liberia, Sida and the National Board of Trade work together to develop skills designed to help Liberia become a member of the WTO. With Sida's support to the International Trade Centre (UNCTAD / WTO) and the Enhanced Integrated Framework (EIF), we contribute to strengthening international competitiveness and to strengthening the understanding of the international trade rules among companies in developing countries.
Regional trade and economic integration
Starting to trade with neighbouring countries can be a step forward towards joining the global market. Regional economic integration can also have a conflict prevention effect when economies are intertwined. With Sida's support to e.g. East African Community, or through the organisation TradeMark East Africa, greater regional integration and trade are promoted, by e.g. helping to lower trade- and transportation costs. Sweden's support to Middle East and North Africa aims to contribute to strengthened democracy and respect for human rights, as well as to sustainable development that improves prerequisites for peace, stability and freedom in the region. One step in this direction is the support for establishment of a regional market by promoting regional economic integration.
Openness to trade and a better access to markets are not enough to increase trade. This is why Sida also works to simplify bureaucracy and reduce the costs of trading. This can also involve strengthening the country’s ability to verify that the domestic production (both agricultural and industrial) meets the requirements set by international markets.
Through support to the World Customs Organisation (WCO), Sida contributes to reducing export- and import transportation time by contributing to clearance of goods in a smoother, faster and cheaper way. In Uganda, Sida supports a project aimed at increasing competitiveness of Ugandan goods and services by strengthening the country's regulatory framework and institutions working with quality assurance, which is expected to lead to increased trade both regionally and globally.