EU trade policy towards developing countries, including ‘Aid for Trade’

SUMMARY OF:

Communication (COM(2012) 22 final — Trade, growth and development — Tailoring trade and investment policy for those countries most in need

EU strategy on ‘Aid for Trade’: enhancing EU support for trade-related needs in developing countries

WHAT IS THE AIM OF THE COMMUNICATION AND THE STRATEGY?

The communication suggests actions to help least-developed countries (LDCs), and other countries most in need, to gain the benefits of trade for inclusive growth and sustainable development.
The strategy on ‘Aid for Trade’* (AfT) aims to improve the integration of developing countries and LDCs into the world trading system.
The strategy was designed to be in line with the objectives of the United Nations (UN) Millennium Development Goals, since replaced by the Sustainable Development Goals for 2030.

KEY POINTS

The communication highlights the role of the following trade and development instruments for the benefit of developing countries and LDCs:

the generalised scheme of preferences (GSP), which allows developing countries to pay lower or no duties on their exports to the EU. A revised GSP, which has a greater focus on least-developed countries, entered into force in 2014;
the boosting of bilateral and regional relations with developing countries, such as free trade agreements with countries in Asia, Latin America, Europe’s Eastern neighbourhood and the southern Mediterranean;
promoting foreign direct investment in developing countries and LDCs;
assistance to small traders in developing countries and LDCs to help them better access the European Union (EU) market via, for example, the Export Helpdesk;
emphasising the importance of good governance in developing countries; it seeks to
- stimulate trade and investment
- ensure that the poorest people also benefit from the economic growth resulting from trade and
- secure the sustainability of their development.

The strategy sets out a series of priorities:

boosting the overall AfT provided by the EU under its development aid commitments;
increasing the impact of resources provided by the EU and EU countries to developing countries and LDCs by improving their collaboration and coordination;
encouraging regional integration between the African, Caribbean and Pacific States (ACP) and focusing action on poverty reduction;
reinforcing progress monitoring. For this purpose, the European Commission produces an annual monitoring report on EU AfT.

Financing:

The European Development Fund (EDF) for ACP countries.
The Development Cooperation Instrument (DCI) for other developing countries.
The Instrument for Pre-accession Assistance (IPA II) where it covers developing countries, such as Turkey, which is the largest recipient of EU AfT.

Additional points:

The use of trade as a tool for inclusive growth and sustainable development is also highlighted in the 2011 communication ‘Increasing the Impact of EU Development Policy: an Agenda for Change’; and emphasised further in the 2012 communication ‘Trade, growth and development — Tailoring trade and investment policy for those countries most in need’.

BACKGROUND

Many developing countries face an array of obstacles when it comes to international trade, such as poor infrastructure, poor trade diversification, inefficient customs procedures or excessive red tape. As developing countries now account for over 50% of global trade, there is much to be gained from overcoming these obstacles: from improved business environments to global poverty reduction.
The strategy falls under the framework of the Doha Development Agenda, adopted by the World Trade Organisation.
For more information, see:
- ‘Aid for Trade’ on the European Commission's website.

* KEY TERMS

Aid for Trade (AfT): aid that helps partner countries take advantage of opportunities created by unilateral, bilateral or multilateral trade agreements.

MAIN DOCUMENTS

EU Strategy on Aid for Trade: Enhancing EU support for trade-related needs in developing countries — Conclusions of the Council and of the Representatives of the Governments of the Member States meeting within the Council, 29 October 2007

Communication from the Commission to the European Parliament, the Council and the European Economic and Social Committee — Trade, growth and development — Tailoring trade and investment policy for those countries most in need (COM(2012) 22 final, 27.1.2012)