Trade Logistics - Norwegian Focus

Erik Strømsøe,

Head of

Information Office for Private Sector Development

NORFUND, Norway

Annual Trade Logistics Conf., WDC, June 7, 2010

”Disclaimer”

• no official spokesman for the Norwegian Government!

• views based on own experience:

– from private sector around the world

– from development cooperation agency experience in PSD

– from investment fund activities in developing countries

– from dialogue with private sector on public support and investment instruments aimed at developing countries

– as public servant and observer

probably biased with regard to belief in Private Sector as a vital tool for economic development and poverty reduction

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

2

Trade logistics - an important sector?

Representing Norfund, - the Norwegian mini-version of IFC, and with background from private sector in global markets through 35 years:

never in doubt of the importance of international trade and smooth un-bureaucratic trade logistics across borders as economic development booster and poverty reducer!

a recent internal survey in Norfund listed often experienced obstacles to investment implementations:

• physical administration of duty free imports/VAT exemptions/tariffs• mismatch in information between ”One-stop-investment-centre” and

revenue collection agencies• complexity and time consumption in trade logistics administration• infrastructure and capacity shortcomings in trade logistics chain and

standards generally• exposure for petty corruption!

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

3

The Norwegian view and policy:

• commitment to a fair global international trade, including the developing countries on equal terms

• recognition of efforts needed to include developing countries’ involvement in world trade beyond formal market access

• recognition of low income countries’ need for help to make use of an open, rules-based international trade regime, and establish necessary prerequisites beyond market access, such as:

• well functioning regulations and trade procedures (Category 1)

• productive capacity and infrastructure (Categories 2-3)

• marketing expertise

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

4

Norwegian Milestones

• Norwegian development cooperation budget 1,1 % of GNP (approx 27 bNOK). >1/3 goes for economic development (up from ¼ 10 years ago)

• The Norwegian Government’s Aid-or-Trade action plan 2007 increased the funding for the program with 80% to 125 mNOK in 2008 and 2009, continuing upwards in 2010.

• approx. 10 % of Norwegian private sector’s requests for PSD support related to trade activities, - 20% of PSD global instruments funds approved

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

5

Norwegian Priorities

• General: EIF – Enhanced Integrated Framework

- demand driven – 46 LDCs engaged

• Geography: Africa and LDCs

• 3 thematic particular attentions:

– good governance and fighting corruption

– regional trade

– women and trade.

• no support to programs conditioned upon liberalization / privatization

• support to WB multidonor fund on innovative projects in trade and development

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

6

Norwegian channels for AfT

• close to 100% multilateral, in line with Paris-declaration and Norwegian general development policy. The 4 largest are:

– EIF approx. 30 mNOK (LDC – Good Gov. – T. Policy)

– UNIDO approx. 25 mNOK (Standards - Cap.Build. – Product control)

– ITC approx. 20 mNOK (Good Gov. – T. Policy – Fair T.)

– WBG approx. 13 mNOK (Gender – Regional T. – Innov. Proj.)

• support channel determined by organizations' comparative advantage

• extensive use of trust funds and frame agreements

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

7

Prioritized thematics (I)

Good Governance and fighting corruption

- a number of projects within:

– trade policies/regulatory frameworks

– trade and export facilitation

– improved standards for agro and industrial products

– ethical and fair trade

– capacity building on trade negotiations

• channels:

– UNIDO/WTO/WB/UNCTAD/ITC/etc

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

8

Prioritized thematics (II)

Regional Trade • experience:

– barriers-to-trade (tariffs/non-tariff barriers/poor infrastructure) often greater between developing countries than between these and industrialized countries

– landlocked states’ particular challenges

• remedies:– regional diagnostic studies– financing infrastructure and capacity building

• most actors active, both donors and receivers, in a high number of projects

• channels:– ITC (especially Africa)/WBG/UNIDO

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

9

Prioritized thematics (III)

Women and Trade

• equal gender opportunities – challenges formal/informal sector - benefits from increased trade: to be reflected in trade policies and agreements

• less focused by developing countries, but improving through pioneering work in Rwanda, Liberia and SADC!

• trade liberalization and expansion may have both positive and negative effects on gender issues: beware!

• channels:

– ITC/ILO/WB /HSH (The Federation of Norwegian Commercial and Service Enterprises) (especially in East Africa)

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

10

Success stories (I):GSP (Generalized System of Preference for import

of goods from developing countries)

• all 50 LDC have duty and quota free access to the Norwegian Market since 2002, for all their products.

• as of 1.1.2008 further 14 low income countries has been added to the list

• goal: to ease market access for products from LDCs

• result: insignificant increase of import value from these countries so far

Conclusion:

Easy market access necessary and important, but not enough!

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

11

Success story (II): Trade logistics advisory program

• strongly demand driven WBG reform program

• Norwegian support through PSI trust fund:

– support to projects in Rwanda, Liberia, Colombia, Burkina Faso focusing reform work, admin./regulatory improvements, inspection routines, capacity building, dissemination and WBG internal coordination and resource utilization.

– looking for opportunities for secondment of experts to the program

– participation on the Trade Logistics Advisory panel

• goal: ease of country’s participation in international trade through efficient and competitive administrative and bureaucratic logistic systems and infrastructure

• result: So successful that user demand that WBG delivery capacity becomes bottleneck

Conclusion:

Continued and strengthened support.June 7, 2010

Annual Trade Logistics Conference 2010: Norwegian Focus

12

Success story (III):Capacity building programs in UNIDO

• several capacity building, training and reform programs within standardization, product control/safety, legislation compliance, test/control institutions and laboratories, metrology, accreditation etc

• Norwegian support through a frame agreement with Norad (as template for other donors)

• result: important capacity improvements in LDCs and improvements in intra UN coordination.

Conclusion:

Continued and strengthened support

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

13

Future development

• strengthen trade oriented capacity at Norwegian Embassies in chosen developing countries

• intensified efforts through EIF

• maintain level of Aid-for-Trade support in 2011 budgets

• include trade issues in political delegation visits in developing countries, especially Africa

• continued work for donor and intra and inter UN and WBG coordination

• maintaining strong support to proven successful programs/projects

June 7, 2010Annual Trade Logistics Conference 2010: Norwegian Focus

14