Trade, Growth and Development

1 February 2012

Tailoring trade and investment policy for those countries most in need

Tailoring trade and investment policy for those countries most in need

Introduction• On 27 January, 2012, the EU adopted a new Communication on trade, investment and development, highlighting:•Reflect a changing world economy, taking into account the growing importance of emerging markets and the struggle of Least Developed Countries (LDCs)•How the EU’s trade, investment and development policies support poverty alleviation, sustainable development and inclusive growth•How the EU has delivered on its commitments •The EU’s trade and investment policies for development for the next decade

• Key messages• What has changed?• What has the EU done to date?• What does the communication recommend?• Initiatives for Trade, Growth and

Development• Support for Domestic Reform• What Happens Next?

Aims of today

Key messages

• Trade is a key element for growth and development, but on its own is not sufficient

• Differentiating among developing countries, targeting those most in need

• Looking beyond tariff reductions to tackle remaining trade barriers

• Improving the way our instruments deliver and work together

What has Changed?Relative weight of developing countries has grown, but not evenly:•Developing countries now account for over ½ of world exports - G20 developing countries account for 1/3 of world exports•South-South trade has outstripped North-South trade•GDP of emerging economies have grown substantially through trade•LDCs have also shown positive growth and increased trade, but have become further marginalised

Success Stories

FEATURE: Emerging Economies• Countries like Brazil, Russia, South Africa, India and China have leveraged trade to lift millions out of poverty• BRICS countries now account for 17% of world GDP• Such countries are well on track to meeting MDG targets

FEATURE: LDCs• LDCs like Bangladesh, Cambodia and Haiti have developed thriving textile industries• Over the last decade, Bangladesh and Cambodia have increased exports by 80% and 60% respectively

What the EU has done to date

• The EU is the world’s most open market for developing country exports

• Autonomous trading schemes• Everything but Arms• Generalised System of Preferences (GSP+)

• Bilateral/Regional Trade Agreements• Economic Partnership Agreements• Free Trade Agreements

• Leading the multilateral agenda• Main world provider of Aid for Trade• Practical efforts: Rules of Origin, Export

Helpdesk

FEATURE: EU Aid for Trade and the Rwandan Coffee Sector• An EU AfT programme has benefited 60,000 Rwandan farmers, 40% of which are women• The programme focused on capacity building and infrastructure, enhancing local ownership• Rwandan coffee exports have increased by an average of 19% since 2001

What the EU has done to date: EU Imports from Developing Countries

(total excluding fuels)

3,3 3,4 3,2 3,4 3,34,4

5,0 4,7

7,2 7,11,3

1,7 2,0 1,91,4

2,1

2,72,4

3,1 3,3

4,65,1 5,2 5,3

4,7

6,5

7,7 7,1

10,410,3

0

2

4

6

8

10

12

2000 2001 2002 2003 2004 2005 2006 2007 2008 2009

(in

€ b

n)

EU

EU Member States

Total

Leading on Aid for Trade

• The EU and Member States are the world’s largest providers of Aid for Trade with €10.5 bn in 2009

• Sub-Saharan Africa is the main beneficiary of Aid for Trade receiving some €2.9 billion or 29% of the total in 2009

• LDCs receive 22% of the total budget

Aid for Trade brochure

What does the Communication recommend?

• Multilateral agenda a priority – DDA and beyond • Fast adoption of a revamped GSP• Rapid conclusion of the EPAs with ACP countries• Continuing FTA negotiations with Eastern Neighbourhood,

Asia, Latin America, partnerships with Southern Mediterranean

• Improve complementarity between trade and development policies

• Using EU instruments to boost investment• Mature partnership with emerging economies

Supplementary initiatives to support trade for development

• Promote trade for small operators in developing countries

• Promote Corporate Social Responsibility

• Support for sustainability (fair, ethical, organic trade schemes)

• Improve preparedness to support developing countries affected by natural disasters

• Support transparency and due diligence for trade in natural resources

FEATURE: Helping Small Operators

• Improved information on markets (e.g. Export Helpdesk)• Promoting dialogue• IPR support tools• Facilitating access to finance• Simplified proof of origin procedures• Participation in sustainability-schemes

Support for domestic reform

• EU supports domestic reforms but developing countries also have to take responsibility and ownership

• Good governance is vital• Economic reforms can be

assisted by sector-wide programmes or budget support

FEATURE: Cape Verde—Graduating Through Ownership •In 2007, Cape Verde became the second country to graduate from LDC status•It achieved this through sound economic management, progressive openness to trade and good governance

Domestic reforms for trade and investment led growth

• Developing countries• Ownership of development is key

• Emerging economies• Further opening markets to LDCs through preferential schemes

and to other WTO members (4/5 are developing countries) • Take up more global responsibilities (e.g. food security,

sustainability, green growth, climate change)• Mature partnerships with EU on regulatory cooperation

Developed countries• Match EU’s significant level of market access to developing

countries

Moving Forward

Is new legislation required?• No new legislation is attached, some already ongoing • No commitment of new funds but better use of existing

instruments

Next Steps:• The communication will be discussed in the Trade

Council and European Parliament • Trade Council conclusions are expected by 16 March

2012

Conclusion• Growth of emerging economies shows that

development through trade is possible• Differentiated approach to developing countries is

needed, focusing assistance to those most in need, particularly LDCs

• Working to assist developing countries in taking ownership of their own trade and development

• Need for comprehensive action beyond tariff reduction that takes into account sustainability, inclusive growth, good governance and resilience

Thank you for your attention

• DG DEVCO http://ec.europa.eu/europeaid/news/ec_aid-for-trade_en.htm

• DG TRADE • http://ec.europa.eu/trade/wider-agend

a/development/