TCB: Fast Facts
Fiscal Year 2017 Overview
The U.S. government’s trade capacity building (TCB) obligations reached $1.1B in FY2017, invested in 625 activities across 132 countries, geographic regions, or trade groups.
The Millennium Challenge Corporation ($563.1M), the U.S. Agency for International Development ($354.3M), and the Department of Labor ($56.8M) were the three largest supporters of TCB-related activities. The Department of State and the Department of Agriculture (USDA) both increased TCB obligations in FY2017, by $3.9 million and $3.4 million respectively. The two largest categories of TCB investment were trade-related infrastructure ($472.2M) and trade-related labor ($227.8M).
Total U.S. government investments in TCB activities decreased by roughly $77M from the previous fiscal year. A large portion of the decline was due to the fact that Millennium Challenge Corporation (MCC) projects declined from $616.3M in FY2016 to $563.1M in FY2017, but this is mostly due to the fact that MCC reports all the money obligated to each country-specific five-year compact in the year in which the compact began. This gives a rather skewed view of spending, as other government agencies’ TCB investment does not fluctuate as wildly as MCC’s. In the case of FY2017, MCC reported activities under its Benin and Morocco Compacts. Although Sub-Saharan Africa continues to be the largest recipient region, TCB assistance to the MENA region increased more than 500% over FY2016, primarily due to the MCC Compact with Morocco.
Regions & Income Groups
Sub-Saharan Africa received the most trade capacity building (TCB) funding in FY2017, receiving $469.9 million, and continuing a ten-year trend in TCB assistance from the United States. Low-income countries received over four-fifths of TCB assistance to Sub-Saharan Africa (386.1 million). This assistance includes $328.7 million in TCB funding under a new five-year Millennium Challenge Corporation (MCC) compact (all of which is reported in the first year after entering into force) with Benin, and $23.9 million in funding to Tanzania from other agencies.
The Middle East and North Africa was the second-largest recipient region of TCB assistance for the first time in FY2017 due to Morocco’s renewed MCC compact, which included $234.4 million in TCB funding. However, excluding MCC’s contributions, the Western Hemisphere was the second-largest recipient region, with $113.3 million obligated across 23 countries and four subregions.
Bilateral assistance between the United States and recipient governments represented about four-fifths of all TCB assistance ($873.2 million) in FY2017, a similar proportion compared to FY2016. The remainder ($211.4 million) was allocated to global, regional, and subregional programs. Global programs accounted for $81.2 million, followed by Western Hemisphere regional assistance ($45.7 million) and Sub-Saharan Africa regional assistance ($42.2 million).
Funding for low and lower-middle income countries remained relatively constant in FY2017 at $777.9 million compared to $95.4 million for high income and upper-middle income countries. Following the trend of the past three years, however, funding for low and lower-middle income countries represented a minority of total TCB assistance when MCC grants are excluded, accounting for 41.2% of all TCB funding.
U.S. government trade capacity building (TCB) assistance provides for labor-focused assistance to U.S. trading partners. These activities help developing countries and transition economies build strong and competitive workforces which can be leveraged in the global exchange of goods and services. Labor-related TCB activities include efforts geared towards supporting labor standards, workers’ rights, trade unions, workforce development, business education, as well as the social aspects of liberalization.
Labor-related TCB funding reached $227.8 million in FY2017, having increased by more than 200% since FY2016. This makes it the second largest funding category in terms of volume after trade-related infrastructure. This increase was largely driven by hikes in TCB funding implemented by the Millennium Challenge Corporation (MCC) and the U.S. Agency for International Development (USAID).
USAID more than tripled its trade-related labor obligations between FY2016 and FY2017, with its largest activity committing $17.5 million to workforce development in Jordan. Moreover, MCC’s five-year compact with Morocco committed $107.4 million to the Workforce Development Activity, which aims to improve the employability of domestic laborers, especially unemployed women and at-risk youth, through equitable access to private sector technical and vocational training. For these reasons, the Middle East and North Africa region became the primary recipient of labor-related TCB funding (59%) in FY2017.
FY2015 U.S.Government TCB Funding*
Obligations ($US millions) By region and income group
U.S. government trade capacity building (TCB) efforts have supported the design, rehabilitation and construction of trade-related telecoms, transport, ports, airports, power, water, and industrial zones in more than 129 countries, regions, and trade secretariats since 1999. This infrastructure is essential to ensuring that developing and transition economies can connect their domestic products to international markets and harness rules-based trade as an engine for growth. Better infrastructure helps U.S. trade partners capitalize on the benefits of trade, but it also fosters stability and accelerates economic growth so that these countries can advance more quickly toward self-reliance.
In FY2017, trade-related infrastructure totaled $472.2 million, more than double the figure recorded in FY2016. This represents 44% of total TCB funding and makes infrastructure the single largest TCB category in terms of volume. The rise in infrastructure funding was mainly driven by the Millennium Challenge Corporation (MCC) compacts in Benin and Morocco, which implemented 96% of infrastructure funding in FY2017.
While Sub-Saharan Africa remained the largest regional recipient of infrastructure-related TCB funds (70% in FY2017, 93% in FY2016), FY2017 also saw a surge in TCB infrastructure funding directed at the Middle East and North Africa Region, where $127 million were obligated to the Land Productivity Project in Morocco. The Land Productivity Project is part of MCC’s $450 million Morocco Employability and Land Compact, which supports two Moroccan Government priorities that have posed binding constraints to economic growth and investment: youth employability and land productivity. Moreover, the Trade and Development Agency (TDA) committed $4.7M to the US-China Aviation Cooperation Program, Energy Cooperation Program, and an environmental disaster management system which, respectively, support the promotion of technical, policy and commercial cooperation and the development, the commercialization of clean energy and energy efficiency solutions between the two countries, and pilot a system to track and monitor the transportation of hazardous materials.