Many experts consider TCB to be vital for developing countries to benefit from trade liberalization and to participate actively in the global economy. This report examines key issues in TCB, provides an overview of U.S. and international TCB programs, and explores Congressional involvement in TCB. The U.S. Agency for International Development (USAID) has historically provided the bulk of U.S. TCB assistance, but other agencies such as the U.S. Department of Agriculture (USDA), U.S. Department of Commerce, and U.S. Trade and Development Agency (USTDA) also provide such assistance. The Millennium Challenge Corporation (MCC) first provided TCB assistance in FY2005, and in FY2006 and FY2007 its TCB funding obligations surpassed those of USAID. Congress has several policy interests in TCB. First, TCB may be included in some potential free trade agreements (FTAs). Finally, TCB is provided to developing countries through their participation in the WTO, and has been a topic of discussion in the Doha Development Agenda (DDA) round of negotiations. Despite the GSP and other trade preference programs such as the African Growth and Opportunity Act (AGOA), most developing countries have not substantially increased their trade globally or with the United States. Therefore, TCB aims to help developing countries cope with this dislocation. From FY1999 to FY2005, USAID funded the majority of TCB assistance. For example, the Department of Labor and the Department of Agriculture both fund their own programs and implement TCB activities funded by other agencies such as USAID and the State Department. USTR exclusively plays a role in coordinating TCB. In FY2007 OPIC implemented $27 million in TCB programs, mainly in the areas of physical infrastructure development and financial sector development. Trade Capacity Building by Non-U.S. Donors

		Multilateral Trade Capacity Building

TCB is provided by multilateral development banks such as the World Bank and the Inter-American Development Bank (IDB), and through multilateral funds managed by the WTO. Technical assistance is also discussed as part of the WTO negotiations. Legislation on Trade Capacity Building

Congress has passed appropriations legislation providing funds and guidance for trade capacity building. The 110 th Congress directed the administration to use at least $550 million of foreign aid appropriations for TCB in the Consolidated Appropriations Act of 2008 ( P.L. 110-161 ). In the 109 th Congress, the House version of the FY2007 Foreign Operations, Export Financing, and Related Programs Appropriations Bill ( H.R. Legislative Limitations on TCB

In the mid-1980s, Congress passed legislation restricting the use of foreign development assistance programs in response to problems in the U.S. farm economy. In addition to restrictions on agricultural assistance, there are other restrictions on U.S. foreign assistance that affect TCB assistance. Policy Issues

		Motivations for Trade Capacity Building

Trade capacity building is generally regarded as an activity taken on by the United States and other donors for altruistic purposes: to help developing countries benefit from trade and achieve poverty reduction. Evaluating the effectiveness of TCB is another challenge.
Trade capacity building (TCB) is a form of development assistance provided by the United States and other donors to help developing countries participate in and benefit from global trade. In addition to helping developing countries negotiate and implement trade agreements, TCB includes development assistance for agricultural development, customs administration, business training, physical infrastructure development, financial sector development, and labor and environmental standards. Some experts believe that TCB is necessary for developing countries to adjust to trade liberalization and achieve trade-led economic growth.
In FY2007, the United States obligated about $1.4 billion in TCB worldwide. The U.S. Agency for International Development (USAID) funds and implements the majority of U.S. TCB programs. In FY2005, the Millennium Challenge Corporation (MCC) began to fund TCB activities, and in FY2006 and FY2007 it overtook USAID as the agency with the highest TCB obligations. Other agencies also provide TCB, including the U.S. Department of Agriculture, the Department of Commerce, the Treasury Department, the Department of Labor, and the U.S. Trade and Development Agency (USTDA). The United States also contributes to multilateral funds for TCB, and it contributes to multilateral development banks such as the World Bank, which also provide TCB programs.
Congress has played a key role in TCB by providing funding through appropriations legislation. In the 109th Congress, the House passed a measure to create a Trade Capacity Enhancement Fund in the 2007 Foreign Operations Appropriations Bill (H.R. 5522), but this measure was not included in the Senate bill. The 110th Congress directed the administration to use at least $550 million of foreign aid appropriations for TCB in the Consolidated Appropriations Act of 2008 (P.L. 110-161). TCB may become a key part of the 110th Congress' discussions on potential free trade agreements (FTAs) with developing countries, renewal of trade promotion authority (TPA), and U.S. involvement in the Doha round of WTO negotiations. The 110th Congress may also be interested in using TCB to increase the effectiveness of trade preference programs initiated through legislation such as the African Growth and Opportunity Act (AGOA).
In the past, Congress has passed legislation restricting the use of foreign assistance for certain activities promoting trade in developing countries. While TCB generally has trade-promoting motivations, any resulting increased import competition could also raise Congressional concern.
This report describes trade capacity building and discusses the history of TCB in foreign assistance. It also provides an overview of U.S. bilateral TCB assistance, as well as multilateral and bilateral TCB assistance from other donors. There is also a discussion of legislation affecting TCB, including appropriations and legislative restrictions on foreign assistance. Finally, this report highlights some of the policy issues concerning TCB. This report will be updated as events warrant.