By Jonathan Lynn

GENEVA, Nov 20 (Reuters) - Rich countries will increase their "aid for trade" to developing nations by half to around $30 billion by 2010, World Trade Organisation (WTO) Director-General Pascal Lamy said on Wednesday.

The increased funding is an effort to help poor countries take advantage of the opportunities from globalisation, where at present they are hampered by inadequate infrastructure or technology, he told a news conference.

He was talking after a three-day meeting attended by the heads of international financial organisations such as the World Bank and International Monetary Fund, as well as regional development banks, donor governments and developing countries.

"Aid for trade is about generating trade flows and making, through various capacity improvements, trade feed into growth and growth into poverty alleviation for developing countries," he said.

ENGINE FOR GROWTH

China, India and many Latin American countries show that trade liberalisation can be a powerful engine for economic development, helping lift millions out of poverty, said the head of the Organisation for Economic Co-operation and Development (OECD), a think-tank for rich countries, Angel Gurria.

The aid for trade programme will help developing countries choose and carry out projects to foster their trade capacity and ensure that trade is built into their development strategies.

Most aid has some relevance to trade, but Lamy said the key sectors that came up again and again were infrastructure, transport, telecoms, customs facilitation, trade finance and sanitary controls of food and other products.

The meeting had also underscored the importance of investing from a regional perspective, because trade by its nature meant that countries were interconnected.

"When the port of Dar es Salaam is jammed it's not only Tanzania who has problems, but it's also Botswana, Rwanda and Uganda and that's a reality we have to cope with," Lamy said.

A major part of the programme is to monitor aid flows and evaluate projects, work which the OECD will handle.

Lamy said this was essential to set a benchmark against which future success could be measured.

In this first review, the WTO and OECD established that aid for trade averaged an annual $21 billion in the 2002-2005 period, which will be the baseline for the future.

Non-governmental organisations campaigning for development have said that increased funds for aid for trade, if they really materialise, will simply divert aid from other areas such as health or education, rather than adding to overall assistance.

Lamy said there were no assurances that this would not happen, but by monitoring the flows it would be possible to track what was happening. During 2002-2005 aid for trade had fallen slightly as a proportion of total assistance, he noted.

He also dismissed another charge of campaigners -- that aid for trade would be used to bribe poor countries to accept an unfavourable deal in the long-running Doha round of trade talks, insisting that the two were separate.

Lamy said that so far it was not possible to measure the impact on trade of the aid programme, but that international bodies were working on proxy indicators, such as the time taken to clear a container.

(Editing by Andrew Roche)

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