A Study on the Implementation of Korea's Aid for Trade Policy: with Reference to the "Project for Capacity Building in the Trade in Goods and Services for Cambodia"

Abstract

Aid for Trade (AfT) is not a new category of aid, but rather a part of the overall Official Development Assistance (ODA). According to the World Trade Organization (WTO), AfT is about helping developing countries, in particular the least developed, to build the trade capacity and infrastructure they need to benefit from trade opening. Recognizing the importance of trade for the economic development of developing nations, the global AfT Initiative was adopted in 2005 at the WTO Hong Kong Ministerial Conference. Expansion of support for the AfT was also included as one of the sub-goals of the Sustainable Development Goals (SDGs). The Korean government also recognized the importance of the AfT and conducted research over the past few years, but still not enough study has been carried out on this subject matter. Furthermore, the literature review led us to the conclusion that Koreas AfT is mostly incoherent and unstructured, which stems from the fact that no national guidelines for the AfT have yet to be established. According to the OECD and WTO, there are four components to the AfT: trade policy and regulation, economic infrastructure, productive capacity building and adjustment assistance. After the literature review, it was found that for low-income countries, AfT in the form of economic infrastructure and productive capacity building (i.e. hard aid) proved not to be conducive to the export promotion of the aid recipient countries. In contrast, AfT in the form of trade policy and regulation and adjustment assistance (i.e. soft aid) proved to be highly effective in promoting the export and trade of the said countries. Contrary to such findings, however, the majority of Koreas AfT was found to be centered around hard aid, whereas AfT in the form of soft aid – which actually proved to be effective – accounted for a very small fraction of its entire AfT. Based on such observations, this study attempts to shed light on why such imbalance occurs by conducting a case study on one of the AfT projects on soft aid carried out by the Korean government. To this end, the study focused on the governance structure of this particular project and analyzed it by using a two-fold framework of policy implementation process. The first framework consists of the policy environment and context, the policy content, and the organizational structure of policy, through which the specifics of the project as well as its governance structure can be identified and evaluated. By analyzing the project using the first framework, it was found that the policy content mostly revolved around lectures and learning by rote which did not translate into policy recommendations. As regards the organizational structure of policy, it was observed that the governance structure of the project was fragmented in nature, with KOICA being the policy decision-makers and KIEP being the policy practitioners. The second framework is about how the discrepancy between the policy objective and policy instruments affects the actors involved in the policy implementation process. By analyzing the project using the second framework, it was found that KOICA, the policy decision-makers, set the official policy objective as contribute to the trade capacity building of Cambodia through the establishment of national trade policy, provision of policy recommendations, strengthening of institutions and human resources to adapt to the free trade system, etc. so that the actual policy objective is not exposed and the project stays legitimate and valid. In reality, however, contribute to the trade capacity building of Cambodia through the provision of mechanical and theoretical lectures was set as an actual policy objective so that the implementation of the project becomes less complex. In this case, KIEP, the policy practitioners, recognized the official policy objective to be the actual policy objective, but because there existed an actual policy objective hidden behind the official objective, policy instruments were designed based on that. In other words, the provision of mechanical and theoretical lectures was set as a policy instrument. This can be inferred from the fact that no follow-up consultation or exchange of ideas took place after the termination of the project, and also from the fact that there were many instances where the emails from the Cambodian officials were never answered by the Korean counterparts. Policy practitioners expect policy instruments to align with the official policy objective, but soon realize that the actual policy instruments that they are faced with are not what they initially expected. Eventually, the policy practitioners experience the discrepancy between their perception of actual policy instruments and their expected policy instruments, which in turn make them realize that their perceived policy objective is quite different from the expected policy objective. This might cause confusion and conflict during the implementation process of the project, which may potentially lead to policy failure in the end. From these findings, we can infer that there occurred some form of policy discrepancy in this project. That is to say, the policy practitioners might have experienced confusion after being faced with policy instruments that bear little consistency with their perceived version of policy objective. This can often lead to policy actors having different levels of expectation of their behaviors and roles, which may escalate into a conflict. For the soft AfT – especially when policy decision-makers and policy practitioners are separate entities as seen in this case – the possibility of policy discrepancy increases, which in turn could hinder the smooth implementation of the project. This is because perfectly organic communication between the policy decision-makers and policy practitioners is impossible. After all, this can be one of the many reasons as to why AfT is mostly skewed towards hard AfT instead of soft AfT. Therefore, in order for the implementation of AfT projects to be successful, Koreas AfT projects should be designed in a way that overcomes the discrepancy between the policy objective and policy instruments. First, in the case of soft AfT projects, provision of practical policy recommendations conducive to the establishment of national trade policy of aid recipient countries should be set as an actual policy objective, and policy instruments should be designed accordingly so that policy practitioners do not experience any confusion during the policy implementation process. Second, to this end, conscious effort into making sure follow-up consultations and exchange of ideas take place should be made. Finally, policy advice should not merely end up being theoretical, but instead should be designed in a way that can lead to the establishment of trade policy that reflects the need of the recipient countries. In order for such things to happen, more effort should be put into overcoming the fragmented relationship between the policy decision-makers and policy practitioners.