The WTO’s Aid for Trade development framework has long served as a vital engine for global economic development, particularly in supporting developing countries to integrate into   the international trading system. However, as the global economy undergoes profound changes, Aid for Trade in 2025 is set to face an array of formidable challenges. Rising trade protectionism, economic slowdown, supply chain restructuring, and disruptions in multilateral trade systems could weaken developing countries’ ability to access trade aid resources, further fragment international markets, and stifle trade growth.

In recent years, escalating trade tensions among major economies have heightened uncertainties in global supply chains. Businesses, seeking to mitigate risks, are shifting production bases, exposing some developing countries to reduced investments and declining exports. Additionally, the economic slowdown has strained sources of funding for trade aid, placing infrastructure development and trade capacity-building efforts in developing nations under pressure. Simultaneously, the World Trade Organization (WTO) is grappling with unprecedented challenges. As unilateralism and bilateral trade agreements proliferate, the influence of multilateral trade mechanisms continues to erode, casting uncertainty over the future of Aid for Trade.

Following Donald Trump’s return to the White House in 2025, his administration implemented a series of tariff hikes, prompting retaliatory measures from multiple countries and further destabilizing global trade. These developments will likely exacerbate the difficulties that developing countries face in gaining a foothold in international markets. The current volatility in global trade presents mounting obstacles for the advancement of Aid for Trade.

Nonetheless, the outlook for Aid for Trade is not entirely bleak. Amid growing uncertainties in multilateral systems, regional trade cooperation is gaining traction as developing countries seek to reduce reliance on any single market. The rise of the digital economy also offers new opportunities for trade aid by strengthening digital infrastructure and skills training to help bridge the gap between developed and developing nations. Furthermore, the Sustainable Development Goals (SDGs) will guide future trade aid efforts, encouraging a focus on green trade, environmental sustainability, and social inclusiveness, ensuring that economic growth harmonizes with environmental protection and equity.

WTO Director-General Ngozi Okonjo-Iweala recently stated that despite the challenges facing global trade, globalization remains resilient, and the WTO will continue to play a crucial role in promoting Aid for Trade initiatives. She emphasized that future trade policies must be more inclusive, offering developing countries greater access to global markets.

This issue, which focuses on the global opportunities and challenges faced by Aid for Trade in 2025, invites scholars to analyze emerging trends in trade aid and explore how it can support digital transformation in developing countries, mitigating the adverse impacts of the digital divide on trade development. It also examines the implications of the European Union’s Carbon Border Adjustment Mechanism (CBAM) on developing countries, and how trade aid can help affected nations weather the storm. In addition, we feature insights from scholars on the trade aid strategies of the UK and Australia, with reflections on their relevance and applicability to Taiwan.

In this issue’s special report, we present Taiwan’s Experience in Promoting Aid for Trade, featuring interviews with TaiwanICDF Technical Cooperation Department Director Ming-Hung Yen and DataYoo CEO Chun-Hsiao Wu. They share their thoughts on the evolution and focal points of TaiwanICDF’s trade aid initiatives, as well as their firsthand observations from attending the 9th Global Review of Aid for Trade.

As Adam Smith, the father of capitalism, once noted: “The freedom of the market and competition are the true drivers of economic prosperity.” However, the trend of market fragmentation in today’s world has made it more difficult for developing countries to benefit from free trade, highlighting the importance of Aid for Trade. Through the articles in this issue, we    aim to encourage readers to reflect on how to harness the power of trade aid to help developing countries carve out new opportunities in an increasingly inequitable global trade environment.

Summaries

Trends, Challenges, and Prospects of Aid for Trade in 2025

(Yi-Wen Su, Analyst, WTO and RTA Center, Chung-Hua Institution for Economic Research)

In recent years, global economic recovery has been hampered by the lingering effects of COVID-19, the ongoing Russo-Ukrainian War and the Gaza war, and the worsening impact of climate change. Nevertheless, Aid for Trade reached a historic high in total funding in 2022. With the 2024 U.S. presidential election resulting in Donald Trump’s return to office, questions arise regarding whether his populist and authoritarian policies will reshape the direction of aid or even cause major disruptions in international development assistance. Key focus areas for Aid for Trade in 2025 include infrastructure development, agriculture, digital transformation, and services- related—sectors where Taiwan holds competitive advantages. The government is encouraged to promote greater participation by domestic companies in global Aid for Trade initiatives.

Innovative Approaches to Aid for Trade in the Era of Digital Transformation

(Wen-Ling Su, Director General, Administration of Commerce, Ministry of Economic Affairs)

The digital economy has become a key driver of socioeconomic growth, with rapidly evolving technologies transforming production methods, employment, consumer behavior, and lifestyles,

while also fostering innovative services. However, digital transformation has widened the gap between developed and developing countries. Many developing nations lack the infrastructure, digital capabilities, and policy resources to benefit fully from digitalization. Therefore, Aid for Trade should be driven by technology, centered on people, and focused on disadvantaged groups and developing countries. Emphasis should be placed on enhancing digital infrastructure and capabilities to support digital transformation and foster a more inclusive and equitable global development in the digital age.

The Impact of the Carbon Border Adjustment Mechanism on Trade in Developing Countries Amid the Net-Zero Transition

(Tsung-Yin Chen, Senior Research Manager, European Industry Research Division, Industrial Technology Research Institute)

As the global community pursues net-zero sustainability to combat climate change, international trade plays a crucial role in achieving these goals. Through the CBAM, the EU aims to extend domestic decarbonization efforts to international trade, promoting global cooperation   on emissions reduction. However, such efforts could create new trade barriers and disputes, particularly for developing and least-developed countries. These nations face high exposure in regulated export sectors and lack the capacity to manage carbon content or reduce emissions, amplifying the negative trade impacts of the CBAM. The article discusses these challenges and recommends enhancing communication with major trading partners and implementing supportive measures to prevent the CBAM from becoming a disproportionately burdensome non-tariff barrier for developing countries.

 
Insights from the UK and Australia’s Aid for Trade Strategies: Lessons for Taiwan

(Tzu-Li Lin, Assistant Professor, Department of Political Science, Tunghai University)

China’s Belt and Road Initiative has fundamentally reshaped traditional aid strategies employed by the West, which often emphasize values that are not always welcomed by developing nations. In contrast, China’s emphasis on national interests over humanitarian concerns has made its aid more appealing to some recipient countries. This has prompted a global reassessment of aid strategies. While aid has not always achieved its intended outcomes—such as poverty reduction   or human rights promotion—the UK has prioritized Aid for Trade  to  foster economic growth in developing countries. However, fiscal and economic challenges have hindered its ability to meet poverty reduction targets. Australia, influenced by geopolitical considerations, especially China’s expansion in the South Pacific, has shifted its approach to address regional climate threats. Taiwan, with its robust economic achievements, has a responsibility to contribute to a rules-based international order. Leveraging the Global Cooperation and Training Framework (GCTF) as a platform, Taiwan can overcome diplomatic limitations and effectively engage in Aid for Trade, embodying the spirit of “Taiwan Can Help.”

• Update: 2025/03/27
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