14 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
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| Legal base | —
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| Deposited in Parliament |
16 April 2007 |
| Department | International Development
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| Basis of consideration |
Minister's letter of 23 July 2007 |
| Previous Committee Report |
HC41-xviii (2006-07), para 9 (25 April 2007) |
| Discussed in Council | 14-15 May General Affairs and External Relations Council
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| Committee's assessment | Politically important
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| Committee's decision | Cleared, but further information requested
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Background
14.1 The Commission defines Trade-Related Assistance (TRA) as
"funding or advice provided to support the trade capacity
building efforts of developing countries".[67]
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.
14.2 The 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 implementing them and fulfilling
specific Commission and Member State commitments, made in 2005,
that they would strive to increase their "trade related assistance"
to €2 billion (£1.36 billion) per annum by 2010 —
€1 billion (£0.68 billion) annually from the Commission,
and €1 billion annually from the Member States.
14.3 The Communication, which we considered on 25
April, is the 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. In his
16 April Explanatory Memorandum, the Parliamentary Under-Secretary
of State at the Department for International Development (Mr Gareth
Thomas) welcomed it as a framework for the full joint Aid for
Trade strategy , which would hold EU donors to account for their
commitments and ensure that Aid for Trade was "delivered
coherently and effectively in line with best agreed development
practice". But, apart from the UK, no other Member State
had made public trade related commitments; he was lobbying other
Member States to fulfil their promises in this regard, which would
be particularly important because, with the Commission already
spending close to €1 billion annually on TRA, the bulk of
additional assistance — around €700m per year (£476
million) by 2010 — would need to come from the Member States.
14.4 He also noted that the Africa, the Caribbean
and Pacific (ACP) countries want a strong link between Aid for
Trade and the adoption of EPAs. However, while the Communication
clearly stated that Aid for Trade was not dependent or conditional
upon any trade agreement, the text was ambiguous, implying that
such a link should be made; he wanted to avoid any conditionality
because he believed development funds should be allocated based
only on countries' development needs, and not be linked to the
signing of any particular trade agreement. He was therefore advocating
that the Council make a clear statement reaffirming that there
was no link between Aid for Trade and EPAs, and would continue
to press this point when the strategy itself was developed.
14.5 Finally, the Minister said that the UK had argued
that Aid for Trade should be delivered through existing mechanisms,
but remained open to considering the new notion of regional funds
to encourage regional integration, as presented in the Communication,
if the Commission were to present a detailed proposal.
14.6 With the Communication due to be considered
at the 14-15 May biennial "development" GAERC, we cleared
it but asked the Minister to write, after the 13-14 May "development"
GAERC, with his assessment of how these central issues then stood
and provide an outline of the process thereafter towards the elaboration
of the final Strategy, which — because of the centrality
of trade in development — said that we were minded to recommend
for debate ahead of its final adoption.
The Minister's letter
14.7 With his letter of 17 July the Minister encloses
a copy of the Council Conclusions together with a copy of the
Conclusions relating to Economic Partnership Agreements (EPAs).
14.8 In its Conclusions on aid for trade, the Minister
says that the Council:
- reaffirmed its collective commitment to reach
€2 billion (£1.357m) per annum in aid for trade assistance
by 2010;
- emphasised the principles of aid effectiveness
and the importance of enhancing the pro-poor focus and quality
of aid for trade including a special focus on women and initiatives
such as 'fair trade' and ILO standards;
- acknowledged that aid for trade does not depend
on EPAs and agreed that the strategy "will indicate the overall
share of the Community and collective Member States' increase
of TRA [trade related assistance] available for needs prioritised
by ACP partners. The spend will reflect policy and programming
decisions at country and regional levels"; and
- agreed to improve the quality of monitoring and
reporting at global, donor and partner levels in line with the
new OECD monitoring system.
14.9 He says that:
"The Conclusion at bullet three above reflects
a tension between Member States and the Commission. The Commission
wants to see a clear link between the EU aid for trade commitments
and agreed EPAs while Member States want to avoid any linking
to the signing of any particular trade agreement. The strategy,
which will be agreed as the next part of the process, will therefore
include an indication of the share of the €2 billion commitment
that will be available to the ACP countries as a group. We also
expect the strategy to include a statement that EU aid for trade
is not conditional on any trade agreement."
14.10 With regard to the its Conclusions on EPAs,
the Minister says:
"The Council required the aid for trade
strategy to 'consider EPA regions as a priority in terms of support
to regionally owned initiatives, such as the regional funds that
are being considered. The Council emphasises that these arrangements
should preferably build on existing financing mechanisms and be
transparent, effective, demand-driven and pro-poor.' Regional
funds to encourage regional integration are a new idea. We remain
open to considering regional funds if the Commission presents
a detailed proposal."
14.11 He says that the next step is "to actually
agree the strategy", which he says will be discussed and
agreed at the trade-related General Affairs and External Relations
Council Meeting on 15-16 October and then be presented at the
first WTO Aid for Trade Global Review on 20-21 November.
14.12 With regard to question of monitoring performance,
the Minister says:
"The Global Review will be based on a robust
new monitoring system managed by the OECD and based on OECD data.
The review will also consider the results of aid for trade questionnaires
that will be completed by donors and partner countries. This monitoring
system will be robust and groundbreaking; it will encourage mutual
accountability as well as allow for public scrutiny of aid for
trade performance. The review will probably be attended at Ministerial
level."
Conclusions
14.13 It would seem that no real progress has
been made on the key issues that the Minister identified in April.
14.14 Moreover, we are surprised that there is
uncertainty about UK Ministerial attendance at such a key meeting.
14.15 We should therefore be grateful if the Minister
would write again after the October GAERC meeting, in the hope
that he will have something more concrete and positive to say.
67 See http://ec.europa.eu/trade/issues/global/development/trta/index_en.htm
for further information. Back
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