The COVID-19 crisis has caused economic shockwaves around the globe, highlighting the interconnectedness of countries through global value chains and the importance of a resilient trading system. Appropriate trade policies and regulations can help accelerate the post-crisis recovery by, for example, lowering the cost of trade and expediting the movement of goods across borders. By putting sustainability front and centre in trade and investment decision making, countries can ‘build back better’, stimulating economic recovery while accelerating the green transition.
This policy brief focuses on Aid for Trade as a means to promote green trade and build climate resilience. Key messages from the brief include:
- Aid for Trade is a mechanism to support developing countries build the capacity and infrastructure needed to benefit from trade opening. It accounts for roughly 30 percent of Overseas Development Assistance (ODA).
- Developing countries face the challenge of double exposure to economic and environmental risks, such as commodity price volatility, climate change, and desertification. This demonstrates the importance of integrative policy-making for development, as enshrined in the Sustainable Development Goals (SDGs).
- While some Aid for Trade programs contain explicit environmental objectives, a coherent framework to mainstream environment into all Aid for Trade projects and programs is required to enhance resilience and better enable countries to seize sustainable trade opportunities.