International Trade Center (ITC) Targets

UNCLAS GENEVA 000672

SIPDIS
SENSITIVE

DEPT for IO/EDA, IO/MPR, EAP/EP, USAID, EEB, PASS TO
USTR

E.O. 12958: N/A
TAGS: ECON UNCTAD APECO EAID EINV
SUBJECT: International Trade Center (ITC) Targets
AGOA, APEC and Seeks more posts


1. (U) SUMMARY: During an August 7 courtesy call
with International Trade Center (ITC) Executive
Director Patricia Francis, Francis asked Charge
Griffiths for USG support for 19 new professional
posts for ITC's 2010-2011 biennial budget, which the
ACABQ in New York has already reviewed. The ACABQ's
report and recommendations are due to be released in
the coming weeks. Francis said the new posts were
essential for ITC to meet growing demand for its
products and to help developing countries recover
from the financial crisis through increasing their
exports. ITC is focusing on the US hosting of APEC
in 2011, AGOA, and developing a stronger partnership
with USAID as means to increase USG involvement
with, and support for, ITC. Griffiths applauded ITC
reforms, its well defined product lines, and its
targeted approach to attract USG support. END
SUMMARY.

BACKGROUND
--------------


2. (U) Patricia Francis became Executive Director
of ITC in June 2006 and has spent the past three
years implementing recommendations from a Danish-led
evaluation, including a massive change management
process to ensure staff buy-in and training on new
methods of operation. ITC now has a clear motto,
(quote) export impact for good, (end quote) five well
defined product lines, a simplified program and
budget process and measurable indicators to evaluate
the impact of its projects on recipients. ITC's
five product lines are: 1) advice on development of
business and trade policies; 2) advice on
development of export strategies; 3) technical
assistance to strengthen trade promotion agencies;
4) trade intelligence to identify and capture market
opportunities; and 5) technical assistance for small
and medium sized enterprises to enable them to
become exporters.


3. (U) Along with voluntary contributions to the
ITC Trust Fund ($28.6 million in 2008),ITC receives
regular budget contributions ($29.1 million in 2008)
through its two parent organizations, the UN
Conference on Trade and Development (UNCTAD) and the
World Trade Organization (WTO). Indicative of donor
support for ITC's reforms and confidence in ITC?s
management, in 2008, for the first time, more than
50 percent of the voluntary contributions to ITC
were unearmarked. The U.S. has pushed for greater
cooperation between ITC and UNCTAD and for inclusion
of ITC programs in UN Development Assistance
Frameworks. In 2008, ITC?s main donors were:
Norway ($3.8 million); Netherlands ($3.6 million);
Sweden and Germany ($3.1 million each); Canada,
Denmark and Switzerland (over $2 million each).


4. (SBU) Despite being favorably impressed with
ITC programs and reforms, the USG only contributes a
small amount to ITC ($81,000 in 2008, according to
the ITC annual report). USAID supports ITC's
investment map program, including paying for annual
training about the program. Investment Map combines
different data (international trade, foreign direct
investment, tariff and foreign affiliated companies)
into an easy-to-use, interactive Internet tool that
allows analysis by country, trading partner and
sector, to identify trade and investment
opportunities.

BUDGET REQUEST - the case for an increase
--------------


5. (U) Francis made the case for more regular
budget positions at ITC on the basis of three
factors: 1) ITC's extra-budget resources have
increased significantly, so ITC needs more core
positions to effectively manage and utilize those
extra-budgetary funds, which are for country-level
technical assistance; 2) this trend will continue as
the amount of resources available for Aid for Trade
(all ITC technical assistance qualifies as Aid for
Trade) is projected to double by 2010 versus its
2007 level; and 3) ITC's programs can help
developing countries recover from the financial
crisis.



6. (U) Over the period 2000-2008, ITC increased
its technical assistance by 153 percent (from $11.6
to $29.4 million). In contrast, regular budget
resources increased by 69 percent (from $17.2 to
$29.1 million) over the same period. This is
problematic since country-level technical assistance
is funded by extra-budgetary resources,
complemented, at a proportionately diminishing
level, by resources for the design and development
of global, regional and country programmes and the
development of core business line products. Though
overly ambitious, ITC's request for 19 new regular
budget positions would help redress this imbalance
and provide ITC with adequate core staff to enable
ITC to effectively manage and utilize its planned
continued growth in extra-budgetary resources.


7. (U) The most recent data provided by OECD
indicates that Aid for Trade flows have continued to
increase by 10 per cent in 2008, and countries have
pledged to maintain aid flows in 2009. The target
set in 2007 anticipated doubling Aid for Trade by
2010 i.e. additional resources of US$ 2 billion in
2007 increasing to US$ 5-6 billion a year by 2010.
All ITC's programs qualify as Aid for Trade.
Therefore, the growth in resources devoted to Aid
for Trade, combined with ITC's emphasis on
measurable results should continue to increase
demand for ITC's products.


8. (U) Finally, ITC reports that due to the
financial crisis, global trade growth has fallen
from a six per cent growth in 2007 to a massive
decline from late 2008 onwards. Imports into the
main markets (EU27, USA, Japan, China and
Switzerland) from the world have declined 32% during
the last year - measured as the period of the first
four months of 2009 compared to the same 4-month
period in 2008. Exports from LDCs into the main
markets have during the same period declined 45%.
Investment in ITC programs could help many
developing countries to exit the crisis by enhancing
their trade capacity.

ITC WANTS TO WORK WITH US
--------------


9. (U) Francis said she hopes to attract greater
support from the USG through focusing ITC's efforts
on collaborating with the US in three areas: 1)
preparation for the US hosting of APEC in 2011; 2)
helping African countries take more advantage of the
African Growth and Opportunity Act (AGOA); and 3)
working with USAID on a more systematic basis.


10. (U) Francis said ITC is working with APEC
member countries so that a significant number will
be able to complement their participation in the
2011 APEC meeting in the U.S. with a trade fair. She
requested Mission help in coordinating with State on
this.


11. (U) Charge Griffiths and Francis discussed the
difficulty in attracting greater USG support for
ITC. Francis opined that part of the challenge is
her staff?s lack of familiarity with US programs,
such as AGOA, and their extensive experience with
Europeans. Consequently, ITC staff tend to look
first and often exclusively to Europe for
assistance. Francis said she is actively working
with staff to encourage them to reach out to USAID
representatives in countries where ITC has programs,
and Francis herself hopes to work more closely with
USAID here in Geneva. Over the past three years,
Francis has made several trips to Washington to
request more targeted support.

COMMENT
--------------


12. (SBU) ITC has undergone extensive reforms to
define and target its product lines for maximum
impact. It has implemented an excellent evaluation
program that measures the impact of its programs on
beneficiary families, and has entered numerous
successful partnerships with the private sector.
Mission strongly supports ITC's work and believes
ITC is an excellent candidate for greater
contributions from the US.


13. (SBU) ITC did not receive any of the 91 new
posts provided as part of the development pillar.
UNCTAD, ITC's parent organization, received 12
positions, but cannot allocate any of those to ITC,
since the use of UNCTAD's 12 positions was defined
and agreed by the Fifth Committee when they agreed
upon the development pillar. While Mission believes
UNCTAD did not need 12 new positions, Mission
encourages USG to consider ITC's request for new
posts, since ITC is well managed, has undergone
extensive reforms, and has high impact programs that
are often run as partnerships with the private
sector. ITC's technical assistance and advisory
services have proven effective in bringing small and
medium sized enterprises from developing countries
into the international trading system. They also
effectively target women entrepreneurs and
contribute to achievement of the millennium
development goals.


14. (SBU) Francis volunteered that she does not
expect ITC to get funding for all 19 positions, but
hoped that with USG support when the request went to
Fifth Committee, then at least some of the 19
positions ultimately would get regular budget
funding. END COMMENT