IDB helping boost exports from Colombia, Brazil, Central America

By Peter A. Buxbaum, AJOT

The Inter-American Development Bank is helping small and medium-sized exporters in Colombia obtain access to the US market with a grant of $850,000. The grant comes through the IDB’s Multilateral Investment Fund. The Washington-based IDB is also active in several other Latin American programs generally described as ‘Aid for trade.’

The program targeting Colombian exporters is to provide them with education that will enable them to identify export market opportunities, training on accessing international markets with information and communications technologies, and technical assistance to comply with non-tariff requirements for exports to the United States.

Small and medium sized businesses require support programs to help adapt their products and services to the technical requirements of sophisticated international markets like the United States, according to IDB trade specialist Christian Volpe. ‘Colombian small and medium sized exporters face many challenges when they export,’ he said, ‘basically due to a lack of in-depth knowledge of technical export issues, US import regulations and international standards. Some small and medium sized exporters give up on exporting when faced with the magnitude of the requirements.’

The Inter-American Development Bank is the main source of multilateral development finance in Latin America and the Caribbean, which includes support for economic, social and institutional, as well as trade, development. From 2000 to 2005, total financing for development projects totaled $38.7 billion. Of that, 90% involved ordinary commercial lending, eight percent involved concessional lending, which is tied to the implementation of economic reforms, while the remainder was distributed as grant funding.

The IDB has 47 member countries. Borrowing member countries include 26 Latin American and Caribbean countries, with Cuba being one notable exception, while non-borrowing member countries include Austria, Belgium, Canada, Croatia, Denmark, Finland, France, Germany, Israel, Italy, Japan, Korea, Netherlands, Norway, Portugal, Slovenia, Spain, Sweden, Switzerland, the United Kingdom and the United States.

In recent years, IDB has devoted a growing share of its financing to trade-related assistance, Volpe noted. ‘Trade-related assistance, or aid for trade, encompasses both traditional trade-related capacity building and broader forms of assistance aimed at enhancing a country’s capacity to trade,’ Volpe explained.

Aid for trade refers to development finance from developed countries to enhance the participation of developing in world trade. Narrowly defined, the term refers to capacity building-which helps countries formulate, negotiate, and implement trade policy and agreements- and trade development, which includes export promotion and trade finance.

‘More broadly defined, aid for trade also covers support to strengthen a country’s trade-related infrastructure, such as transportation, energy, and communications,’ Volpe said, ‘as well as productive capacities to help it benefit from freer trade. It can also refer to trade-related adjustment programs, such as social safety nets and worker retraining.’

Identifying products with export potential

The Multilateral Investment Fund, or MIF, through which the Colombian export program is being funded, is an autonomous fund administered by the IDB which supports private sector development in Latin America and the Caribbean, with a focus on micro and small businesses. The government of Colombia also provides trade assistance to its exporters and recently undertook a study of products with export potential to the United States. Among the products identified in the study: machinery and mechanical equipment, electrical machinery and equipment, transportation equipment, optical, medical, surgical, and veterinary instruments, musical instruments, plastics, confections, chemicals and pharmaceuticals, pulp and paper,