9 EU Aid for Trade
| (28544)
8390/07
+ ADD 1
COM(07) 163
| Commission Communication: Towards an EU Aid for Trade strategy — the Commission's contribution
|
| Legal base | — |
| Deposited in Parliament | 16 April 2007
|
| Department | International Development
|
| Basis of consideration | EM of 16 April 2007
|
| Previous Committee Report | None
|
| To be discussed in Council | 14-15 May General Affairs and External Relations Council
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared, but further information requested
|
Background
9.1 According to the Commission, Trade-Related Assistance (TRA)
can be seen as "funding or advice provided to support the
trade capacity building efforts of developing countries".[25]
The objective of TRA, or Aid for Trade, is to support all developing
countries, in particular the least developed (LDCs), in their
efforts to reform and to adjust to the world trading system. Aid
for Trade recognises that in order for countries to benefit from
trade liberalisation they need to improve their capacity to trade.
Aid for Trade includes support for capacity to plan and implement
trade-related polices and build up competitive capacity in productive
sectors, enhance the investment and business climate and develop
markets. Projects can target assistance with the World Trade Organisation
(WTO) negotiations, customs reforms, transport, communications,
and energy infrastructure improvements, product safety schemes,
clearer rules and support to private companies in export markets.
9.2 The World Trade Organisation (WTO) General Council adopted
Aid for Trade recommendations in October 2006. The EU Aid for
Trade strategy aims to set out a road map for the implementation
of the recommendations and the delivery of specific European Commission
and Member State commitments. These commitments were made in 2005,
and state that the Commission and Member States would strive to
increase their "trade related assistance" to €2
billion (£1.36 billion) per annum by 2010. This would consist
of €1 billion (£0.68 billion) annually from the Commission,
and €1 billion annually from the Member States.
The Commission Communication
9.3 This Communication is the European Commission's contribution
to further expanding EU support for Aid for Trade, with a view
to adoption of a joint Commission and Member State strategy by
the Council in the second half of 2007, as agreed by the Council
in October 2006. It is fully and helpfully summarised by the Parliamentary
Under-Secretary of State at the Department for International Development
(Mr Gareth Thomas) in his 16 April Explanatory Memorandum as follows:
"The Communication states clearly that Aid for Trade
is a complement to trade negotiations. It is not dependant or
conditional on any trade agreement. However, specific attention
is drawn to Aid for Trade needs relating to the ongoing Economic
Partnership Agreements (EPA) negotiations with the African, Caribbean
and Pacific (ACP) countries. Aid for Trade is also recognised
as being an important element of the Commission's assistance to
Asian and Latin American countries.
"The Communication emphasises that the October 2006 Council
decided that a substantial share of Aid for Trade should be dedicated
to ACP countries. It also proposes support for regional EPA funds.
"Key parameters for the delivery of EU Aid for Trade
include increasing the volume and quality of assistance, ensuring
robust monitoring and making sure that the EU has adequate capacity
to deliver the Aid for Trade strategy.
"Increasing the Volume of EU Aid for Trade. The
Communication explains that the Commission will meet its commitment
to spend €1 billion annually because it is already spending
close to this sum. There is less clarity with regard to Member
States who need to deliver the bulk of additional assistance —
around €700m (£476 million) by 2010 on the basis of
trade related priorities articulated in partner countries' own
national development strategies. Therefore assisting partner countries
with the identification and prioritisation of trade needs is integral
to EU efforts to meet its commitments.
"The Communication champions the Integrated Framework
(IF) as a key instrument for enabling LDCs to prioritise trade
priorities in their national development plans and supports the
extension of the IF approach to other developing countries. The
IF is a multi-donor programme [] that assists LDCs to integrate
into the global economy. Its objectives are to 'mainstream' trade
into the national development plans of least-developed countries;
and to assist in the co-ordinated delivery of trade-related technical
assistance in response to needs identified by the LDC.[26]
"The Communication notes a lack of precision regarding
the new 2006 Aid for Trade categories and some overlapping with
'trade related assistance'; it notes the ongoing discussions in
the Organisation for Economic Cooperation and Development's (OECD)
Development Assistance Committee, in which the EU participates,
to clarify the scope and develop a monitoring and reporting system.
The Communication recommends that, in any case, the strategy ensures
that the integrity of the EU commitments is maintained.
Enhancing the Quality of EU Aid for Trade. Aid for
Trade activities will take account of existing EU agreements on
donor harmonisation and aid effectiveness. Donors are required
to coordinate their support of country led development plans.
The joint strategy will emphasise poverty reduction (including
the gender dimension), ownership (including the participation
of the private sector/civil society), sustainability (including
impact assessment), joint analysis through the Integrated Framework
process, programming/delivery (including consideration of sector
wide approaches and general budget support) and effectiveness
of regional Aid for Trade.
"Monitoring and reporting. Results-based monitoring
and reporting on EU Aid for Trade will be aligned and streamlined
with the WTO/OECD monitoring framework and focus on both the quantitative
and qualitative aspects of Aid for Trade delivery. Developing
countries will be given support to build capacity in these areas.
"EU Capacity for Aid for Trade. The Communication
recognises that building human capacity in donor organisations
is a precondition for scaling up Aid for Trade; it recommends
taking stock of current capacity and exploring joint initiatives
to develop and share expertise."
The Government's view
9.4 The Minister welcomes the Communication as a framework for
the full joint Aid for Trade strategy that the Council envisages
being developed by Member States and the Commission, "since
it will hold EU donors to account for their commitments and it
will ensure that Aid for Trade is delivered coherently and effectively
in line with best agreed development practice". The Communication,
he says, "shows that the EU is serious about delivering its
€2 billion per annum commitment and thereby gives important
assurances to ACP countries. Increased Aid for Trade is vital
to promote growth and reduce poverty". He continues as follows:
"Apart from the UK, no other Member State has made public
trade related commitments. It is not yet clear how the collective
Member State commitment of €1 billion annually will be met,
but Member States should address this in the final version of
the strategy. We are lobbying other Member States to fulfil their
promises in this regard.
"The UK Government has already committed to increasing
'trade related assistance' to £100m by 2010 and is well on
track to achieving this. The UK will therefore make a significant
contribution to the Member States' collective commitment to increase
'trade related assistance' to €1 billion. In September 2006,
in advance of the endorsement of the WTO Aid for Trade Task Force
recommendations, the UK also announced a forecast expenditure
of $750 million (£379 million) by 2010 for 'trade related
assistance' plus economic infrastructure and including multilateral
contributions.
"Because the Commission is already spending close to
€1 billion annually on 'trade related assistance' the bulk
of additional assistance — around €700m per year (£476
million) by 2010 — will come from the Member States. This
Communication, and the following strategy, will be important methods
of publicising the Member States' actions".
9.5 He notes that the ACP countries want a strong link between
Aid for Trade and the adoption of EPAs. However:
"while the Communication clearly states that Aid for
Trade is not dependent or conditional upon any trade agreement,
the text is ambiguous, implying that such a link should be made.
The UK wants to avoid any conditionality because we believe development
funds should be allocated based only on countries' development
needs, and not be linked to the signing of any particular trade
agreement. We are advocating that the Council make a clear statement
reaffirming that there is no link between Aid for Trade and EPAs.
We will continue to press this point when the strategy itself
is developed".
9.6 Finally, the Minister says that the UK has argued that Aid
for Trade should be delivered through existing mechanisms. "Regional
funds to encourage regional integration, as presented in the Communication,
are a new idea. However, we remain open to considering regional
funds if the Commission presents a detailed proposal".
9.7 The Communication will now be considered at the 14-15 May
"development" GAERC.
Conclusion
9.8 That trade and development go hand in hand is a given;
and, within that, helping developing countries to be able to trade
effectively is crucial. Getting the EU's contribution right will
therefore be important, especially for the ACP countries. A great
deal of European taxpayers' money is also involved.
9.9 As the Minister makes clear, this is still a work-in-progress.
Major uncertainties remain over the willingness of other Member
States to follow the UK's financial lead, which will be crucial
to the success or otherwise of the final Strategy, and over the
nature of the linkage between the Strategy and the Economic Partnership
Agreements between the ACP countries and the EU (as, indeed, there
continue to be at present about the nature of those EPAs, where
there are strong divisions between the ACP and the EU over the
nature of EU market access in the ACP and, within the EU, over
ACP market access into the EU). There are reassuring words about
monitoring, assessment, reporting and strategy adjustment —
but will they be more reliable than previously?
9.10 We should therefore be grateful if, after the 13-14 May
"development" GAERC, the Minister would write to us
with his assessment of how these central issues then stand and
provide an outline of the process thereafter towards the elaboration
of the final Strategy, which — because of the centrality
of trade in development — we are likely to recommend for
debate ahead of its final adoption.
9.11 In the meantime, we clear the document.
25
See http://ec.europa.eu/trade/issues/global/development/trta/index_en.htm
for further information. Back
26
The IF program was first mandated by WTO Singapore Ministerial
Conference in December 1996. The participating agencies are the
IMF, ITC, UNCTAD, UNDP, World Bank and the WTO. Back
|
